Cost Accounting-Smoky Mountain Corporation makes two types of hiking boots

QUESTION

Smoky Mountain Corporation makes two types of hiking boots—Xtreme and the Pathfinder. Data concerning these two product lines appear below: XtremePathfinder Selling price per unit$121.00$91.00 Direct materials per unit$63.70$56.00 Direct labor per unit$8.80$8.00 Direct labor-hours per unit1.1 DLHs1.0 DLHs Estimated annual production and sales26,000 units73,000 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$2,133,600 Estimated total direct labor-hours101,600 DLHs Required:1.Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Do not round your intermediate calculations.) 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): EstimatedExpected Activity Activities and Activity MeasuresOverhead CostXtremePathfinderTotal Supporting direct labor (direct labor-hours)$629,920 28,600 73,000 101,600 Batch setups (setups)768,000 260 220 480 Product sustaining (number of products)710,000 1 1 2 Other25,680 NA NA NA Total manufacturing overhead cost$2,133,600 Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Negative product margins should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places.)

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