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In: AccountingValley View Trailmasters makes two types of tents formountain camping, the Explorer and the Climber....Valley View Trailmasters makes two types of tents formountain camping, the Explorer and the Climber. Data concerning thetwo product lines is presented in the table below:EXPLORERCLIMBERSales price per unit$390$615Direct materials per unit$92$115Direct labor per unit$51$75Estimated annual production4,000 units9,000 unitsThe company has always employed a tradition costingsystem in which manufacturing overhead is applied to units based onmachine hours. Estimated data concerning manufacturing overhead anddirect labor hours for the upcoming year appear below: Estimated total manufacturingoverhead $484,746 Estimated total machinehours 1,000The company is considering replacing its traditionalcosting system with an activity based costing system that wouldassign its indirect product costs to four activity cost pools.Information about the amount assigned to these cost pools, theidentified cost driver for each and usage of the cost drivers bythe two product lines is presented in the followingtable:ACTIVITYTOTAL COSTCOST DRIVERTOTALEXPLORERCLIMBERMachine maintenance$78,840Machine hours1,000350650Batch setups$136,364Setups1466086Quality control$163,020Inspections1,650975675Technical support$106,522Technical support calls964352612Total manufacturing overhead cost$484,746INSTRUCTIONS: Use EXCEL FROMULAS (Show them next to thevalue) to calculate the following amounts in the spaces provided onyour template.1. Calculate the predetermined overhead rate using thetraditional volume-based costing system.2. Calculate the total amount of overhead cost thatwould be assigned to each product line under the company’straditional costing system.3. Calculate the gross margin per unit for each productline using traditional volume-based costing.4. Calculate the activity rate for each cost pool usingactivity-based costing.5. Calculate the total amount of overhead cost thatwould be assigned to each product line using activity-basedcosting.6. Calculate the gross margin per unit for each productline under the proposed activity based costing system.Here is the attached template:Show formulas next to the values.EXPLORERCLIMBERACTIVITYTOTAL COSTCOST DRIVERTOTAL EXPLORERCLIMBERSales price per unit$390$615Machine maintenance$78,840Machine hours1,000350650Direct materials per unit$92$115Batch setups$136,364Setups1466086Direct labor per unit$51$75Quality control$163,020Number of inspections1650975675Technical support$106,522Number of support calls964352612Estimated annualproduction4000 units9000 unitsTotal manufacturing overhead cost$484,746Estimated total manufacturingoverhead:$ 484,746Estimated total machinehours:1,000Calculate the predeterminedoverhead rate using traditionalvolume-based costingCalculate the total amount ofoverhead that would be assigned to each product lineusing traditional volume-basedcostingEXPLORERCLIMBERCalculate the gross margin perunit for each product line using traditional volume-basedcostingEXPLORERCLIMBERCalculate the activity ratefor each cost pool using activity-based costingACTIVITYRATEMachine maintenanceBatch setupsQuality controlLabor supportCalculate the total amount ofoverhead that would be assigned to each product lineusing activity-based costingEXPLORERCLIMBERCalculate the gross margin perunit for each product line using activity-based costingEXPLORERCLIMBER
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