Reference no: EM132605917
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 $ 132.00 $ 94.00
Direct materials per unit $ 64.60 $ 53.00
Direct labor per unit $ 9.60 $ 8.00
Direct labor-hours per unit 1.2 DLHs 1.0 DLHs
Estimated annual production and sales 24,000 units 70,000 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 $ 2,470,000
Estimated total direct labor-hours 98,800 DLHs
Required:
Question 1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system.
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