Reference no: EM132644648

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                        $115.00                            $85.00

Direct materials per unit                         $65.40                       $53.00

Direct labor per unit                                $16.00                        $10.00

Direct labor-hours per unit                        1.6DLHs                     1.0DLHs

Estimated annual production and sales           32,000units           60,000units

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 $1,779,200

Estimated total direct labor-hours 111,200DLHs

Required:

Problem 1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system.