Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two...

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Accounting

Smoky MountainCorporation makes two types of hiking boots—the Xtreme and thePathfinder. Data concerning these two product lines appearbelow:
Xtreme Pathfinder
Selling price per unit $ 120.00 $ 87.00
Direct materialsper unit $ 63.30 $ 52.00
Direct labor perunit $ 17.00 $ 10.00
Directlabor-hours per unit 1.7 DLHs 1.0 DLHs
Estimated annualproduction and sales 22,000 units 76,000 units
The company has atraditional costing system in which manufacturing overhead isapplied to units based on direct labor-hours. Data concerningmanufacturing overhead and direct labor-hours for the upcoming yearappear below:
Estimated
Overhead Cost Expected Activity
Activities andActivity Measures Xtreme Pathfinder Total
Supporting direct labor (direct labor-hours) $ 703,080 37,400 76,000 113,400
Batch setups(setups) 480,000 220 180 400
Productsustaining (number of products) 700,000 1 1 2
Other 44,720 NA NA NA
Totalmanufacturing overhead cost $ 1,927,800
Compute the productmargins for the Xtreme and the Pathfinder products under theactivity-based costing system.
3. Prepare aquantitative comparison of the traditional and activity-based costassignments.
Estimated totalmanufacturing overhead $ 1,927,800
Estimated totaldirect labor-hours 113,400 DLHs

Answer & Explanation Solved by verified expert

3.9 Ratings (403 Votes)

1 Product margin for the X treme and the Pathfinder products under the Traditional costing system X treme Pathfinder Total Sales 2640000 6612000 9252000 Cost of goods sold Direct Materials 1392600 3952000 5344600 Direct labor 374000 760000 1134000 Manufacturing See Answer

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	Xtreme			Pathfinder
Selling price per unit	$	120.00		$	87.00
Direct materialsper unit	$	63.30		$	52.00
Direct labor perunit	$	17.00		$	10.00
Directlabor-hours per unit		1.7	DLHs		1.0	DLHs
Estimated annualproduction and sales		22,000	units		76,000	units

	Estimated Overhead Cost		Expected Activity
Activities andActivity Measures	Estimated Overhead Cost		Xtreme	Pathfinder	Total
Supporting direct labor (direct labor-hours)	$	703,080	37,400	76,000	113,400
Batch setups(setups)		480,000	220	180	400
Productsustaining (number of products)		700,000	1	1	2
Other		44,720	NA	NA	NA
Totalmanufacturing overhead cost	$	1,927,800


Estimated totalmanufacturing overhead	$	1,927,800
Estimated totaldirect labor-hours		113,400	DLHs