80.2K

Verified Solution

Link Copied!

2 10 points / \\ l 00:59:59 | \\8 J eBook El References Problem 7-17 (Static) Comparing Traditional and Activity-Based Product Margins [L07-'l. LO7-3. L074, LO7-5] Smoky Mountain Corporation makes two types of hiking bootsXtreme and Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder Selling price per unit $ 149.96 $ 99.99 Direct materials per unit $ 72.96 $ 53.99 Direct labor per unit $ 24.96 $ 12.99 Direct labor-hours per unit 2.6 DLHs 1.9 DLH Estimated annual production and sales 29,996 units 36,999 units The company has a traditional costing system that applies manufacturing overhead to units based on direct laborhours. Data concerning manufacturing overhead and direct laborhours forthe upcoming year appear below: Estimated total manufacturing overhead $ 1,939,999 Estimated total direct laborhours 129,699 DLHs Required: 1. Compute the product margins for Xtreme and Pathfinder under the company's traditional costing system. 2. The company is considering replacing its traditional costing system with an actiyity-based costing system that would assign its manufacturing overhead to the following four activity cost pools [the Other cost pool includes organization-sustaining costs and idle capacity costs): Estimated Expected Activity Activities and {Activity Measures) Overhead Cost Xtreme Pathfinder Total Supporting direct labor [direct labor-hours} $ 783,666 46,999 39,699 129,966 Batch setups (setups) 495,966 299 199 366 Product sustaining (number of products) 692,466 1 1 2 Other 99,669 NA NA NA Total manufacturing overhead cost $ 119895999 Compute the product margins for Xtreme and Pathfinder under the activity-based costing system. 3. Prepare a quantitative comparison ofthe traditional and actiyityibased cost assignments

Answer & Explanation Solved by verified expert

See Answer