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Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and lines appear below: Selling price per unit Xtreme $ 126.00 Pathfinder $ 91.00 Direct materials per unit $ 63.20 $ 51.00 Direct labor per unit $ 11.70 $ 9.00 Direct labor-hours per unit Estimated annual production and sales 1.3 DLHS 21,000 units 1.0 DLHS 75,000 units The company has a traditional 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 Estimated total direct labor-hours $ 2,250,600 102,300 DLHS Required: 1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. 2. The company is considering replacing its traditional costing system with an activity-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 id

Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and lines appear below: Selling price per unit Xtreme $ 126.00 Pathfinder $ 91.00 Direct materials per unit $ 63.20 $ 51.00 Direct labor per unit $ 11.70 $ 9.00 Direct labor-hours per unit Estimated annual production and sales 1.3 DLHS 21,000 units 1.0 DLHS 75,000 units The company has a traditional 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 Estimated total direct labor-hours $ 2,250,600 102,300 DLHS Required: 1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. 2. The company is considering replacing its traditional costing system with an activity-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 id

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder Selling price per unit $ 126.00 $ 91.00 Direct materials per unit $ 63.20 $ 51.00 Direct labor per unit $ 11.70 $ 9.00 Direct labor-hours per unit Estimated annual production and sales 1.3 DLHS 21,000 units 1.0 DLHS 75,000 units The company has a traditional 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 Estimated total direct labor-hours $ 2,250,600 102,300 DLHS Required: 1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. 2. The company is considering replacing its traditional costing system with an activity-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): Activities and (Activity Measures) Supporting direct labor (direct labor-hours) Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost Estimated Overhead Cost $ 767,250 722,000 670,000 Expected Activity Xtreme Pathfinder Total 27,300 75,000 102,300 210 170 380 1 1 2 91,350 NA NA NA $ 2,250,600 Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
Transcribed Image Text:Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder Selling price per unit $ 126.00 $ 91.00 Direct materials per unit $ 63.20 $ 51.00 Direct labor per unit $ 11.70 $ 9.00 Direct labor-hours per unit Estimated annual production and sales 1.3 DLHS 21,000 units 1.0 DLHS 75,000 units The company has a traditional 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 Estimated total direct labor-hours $ 2,250,600 102,300 DLHS Required: 1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. 2. The company is considering replacing its traditional costing system with an activity-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): Activities and (Activity Measures) Supporting direct labor (direct labor-hours) Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost Estimated Overhead Cost $ 767,250 722,000 670,000 Expected Activity Xtreme Pathfinder Total 27,300 75,000 102,300 210 170 380 1 1 2 91,350 NA NA NA $ 2,250,600 Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
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