Rocky mountain corporation makes two types of hiking

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Reference no: EM13579968

Rocky Mountain Corporation makes two types of hiking boots-Xactive and the Pathbreaker. Data concerning these two product lines appear below:

	Xactive			Pathbreaker
Direct materials per unit	$	65.80		$	52.00
Direct labor cost per unit	$	19.20		$	14.00
Direct labor-hours per unit		1.4	DLHs		1	DLHs
Estimated annual production and sales		35,000	units		85,000	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	$2,814,000
Estimated total direct labor-hours	134,000	DLHs

Required:

1-a.

Compute the predetermined overhead rate based on direct labor-hours. (Round the intermediate calculations and final answer to two decimal places.)

Predetermined overhead rate

$ per DLH

1-b.

Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product. (Round the intermediate calculations and final answer to two decimal places.)

	Xactive	Pathbreaker
Unit product cost	$	$

2.	The company is considering replacing its conventional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools:

	Estimated Overhead Cost		Expected Activity

Activities and Activity Measures			Xactive	Pathbreaker	Total
Supporting direct labor (direct labor-hours)	$	1,038,500	49,000	85,000	134,000
Batch setups (setups)		1,100,000	300	200	500
Product sustaining (number of products)		582,500	1	1	2
General factory (machine-hours)		93,000	3,500	8,500	12,000

Total manufacturing overhead cost	$	2,814,000

Determine the activity rate for each of the four activity cost pools. (Round your final answers to 2 decimal places.)

Activity Cost Pools	Activity Rate
Supporting direct labor	$	per DLH
Batch setups	$	per setup
Product sustaining	$	per product
General factory	$	per MH

3.	Using the activity rates and other data from the problem, determine the unit product cost of each product. (Round the intermediate calculations and final answer to two decimal places.)

	Xactive	Pathbreaker
Unit product cost	$	$

Reference no: EM13579968

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