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Rocky Mountain Corporation makes two types of hiking boots$$Xactive and Pathbreaker. Data concerning these two product lines appear below:

Xactive Pathbreaker

Direct materials per unit $ $64\mathrm{.}80$ $ $51\mathrm{.}00$

Direct labor cost per unit $ $18\mathrm{.}20$ $ $13\mathrm{.}00$

Direct labor$-$hours per unit $1\mathrm{.}4$ DLHs $1\mathrm{.}0$ DLHs

Estimated annual production and sales $25,000$ units $75,000$ units

The company has a conventional costing system in which manufacturing overhead is applied to units based on direct labor$-$hours. Data concerning manufacturing overhead and direct labor$-$hours for the upcoming year appear below:

Estimated total manufacturing overhead $ $2,200,000$

Estimated total direct labor$-$hours $110,000$ DLHs

Required:

$1-$a$.$ Compute the predetermined overhead rate based on direct labor$-$hours.

$1-$b$.$ Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product.

$2.$ The company is considering replacing its conventional costing system with an activity$-$based costing system that would assign its manufacturing overhead to the following four activity cost pools:

Activity Cost Pools and $($Activity Measures$)$ Estimated Overhead Cost Expected Activity

Xactive Pathbreaker Total

Supporting direct labor $($direct labor$-$hours$)$ $ $797,50035,00075,000110,000$

Batch setups $($setups$)680,000250150400$

Product sustaining $($number of products$)650,000112$

General factory $($machine$-$hours$)72,5002,5007,50010,000$

Total manufacturing overhead cost $ $2,200,000$

Determine the activity rate for each of the four activity cost pools.

$3.$ Using the activity rates and other data from the problem, determine the unit product cost of each product.

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