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 $ 64.80 $ 51.00 Direct labor cost per unit $ 18.20 $ 13.00 Direct labor-hours per unit 1.4 DLHs 1.0 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: Estimated Overhead Cost Expected Activity Activity Cost Pools and Activity Measures Xactive Pathbreaker Total Supporting direct labor (direct labor-hours) $ 797,500 35,000 75,000 110,000 Batch setups (setups) 680,000 250 150 400 Product sustaining (number of products) 650,000 1 1 2 General factory (machine-hours) 72,500 2,500 7,500 10,000 Total manufacturing overhead cost $ 2,200,000 Activity Cost PoolsActivity Rate Supporting direct labor$7.25 per DLHBatch setups$1,700per setup Product sustaining$325,000per product General factory$7.25per MHR Determine the activity rate for each of the four activity cost pools. 1. Using the activity rates and other data from the problem, determine the unit product cost of each product.
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 $ 64.80 $ 51.00 Direct labor cost per unit $ 18.20 $ 13.00 Direct labor-hours per unit 1.4 DLHs 1.0 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: Estimated Overhead Cost Expected Activity Activity Cost Pools and Activity Measures Xactive Pathbreaker Total Supporting direct labor (direct labor-hours) $ 797,500 35,000 75,000 110,000 Batch setups (setups) 680,000 250 150 400 Product sustaining (number of products) 650,000 1 1 2 General factory (machine-hours) 72,500 2,500 7,500 10,000 Total manufacturing overhead cost $ 2,200,000 Activity Cost PoolsActivity Rate Supporting direct labor$7.25 per DLHBatch setups$1,700per setup Product sustaining$325,000per product General factory$7.25per MHR Determine the activity rate for each of the four activity cost pools. 1. Using the activity rates and other data from the problem, determine the unit product cost of each product.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 | $ | 64.80 | $ | 51.00 | ||
| Direct labor cost per unit | $ | 18.20 | $ | 13.00 | ||
| Direct labor-hours per unit | 1.4 | DLHs | 1.0 | DLHs | ||
| Estimated annual production and sales | 25,000 | units | 75,000 | units | ||
The company has a conventional costing system in which manufacturing
| Estimated total manufacturing overhead | $2,200,000 | |
| Estimated total direct labor-hours | 110,000 | DLHs |
Required:
| Estimated Overhead Cost | Expected Activity | |||||||||
| Activity Cost Pools and Activity Measures | Xactive | Pathbreaker | Total | |||||||
| Supporting direct labor (direct labor-hours) | $ | 797,500 | 35,000 | 75,000 | 110,000 | |||||
| Batch setups (setups) | 680,000 | 250 | 150 | 400 | ||||||
| Product sustaining (number of products) | 650,000 | 1 | 1 | 2 | ||||||
| General factory (machine-hours) | 72,500 | 2,500 | 7,500 | 10,000 | ||||||
| Total |
$ | 2,200,000 | ||||||||
Activity Cost PoolsActivity Rate
Supporting direct labor$7.25 per DLHBatch
setups$1,700per setup
Product sustaining$325,000per product
General factory$7.25per MHR
Determine the activity rate for each of the four activity cost pools.
1. Using the activity rates and other data from the problem, determine the unit product cost of each product.
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