The company has a traditional costing system in which

Reference no: EM13587249

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

	Xactive			Pathbreaker
Selling price per unit	$	127.00		$	89.00
Direct materials per unit	$	64.80		$	51.00
Direct labor per unit	$	18.20		$	13.00
Direct labor-hours per unit		1.4	DLHs		1.0	DLHs
Estimated annual production and sales		25,000	units		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	$2,200,000
Estimated total direct labor-hours	110,000 DLHs

Required:
1.	Compute the product margins for the Xactive and the Pathbreaker products under the company's traditional costing system. (Negative product margins should be indicated with a minus sign.)

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):

	Estimated		Expected Activity
Activities and Activity Measures	Overhead Cost		Xactive	Pathbreaker	Total
Supporting direct labor (direct labor-hours)	$	797,500	35,000	75,000	110,000
Batch setups (setups)		680,000	250	150	400
Product sustaining (number of products)		650,000	1	1	2
Other		72,500	NA	NA	NA

Total manufacturing overhead cost	$	2,200,000

Compute the product margins for the Xactive and the Pathbreaker 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.)

3.	Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Do not round intermediate calculations. Round your percentage answers to one decimal place.)

Reference no: EM13587249

Questions Cloud

The fasb was influenced by feedback from interested : the fasb was influenced by feedback from interested parties when pension accounting rules were developed. please cite

How do the units moll and ppm compare you will be given a : question how do the units moll and ppm compare? you will be given a 100.5 ppm iron stock solution the iron is ferrous

The eccentricity e of an ellipse is defined as the number : the eccentricity e of an ellipse is defined as the number ca where a and c are the numbers in the defining equation.

On december 31 2010 chrysler inc has a machine with a book : on december 31 2010 chrysler inc. has a machine with a book value of 940000. the original cost and related accumulated

The company has a traditional costing system in which : rocky mountain corporation makes two types of hiking boots-xactive and the pathbreaker. data concerning these two

If a woman with achrondroplasia marries a man with : 1 joes grandfather on his mothers side was a lizard man on a circus sideshownbsp the result of rare x-linked recessive

Cyclopropane is converted to propene in a first-order : question cyclopropane is converted to propene in a first-order process. the rate constant is 5.4 x 10-2 hr -1. if the

The amplitude of a given sine function fx asinxd is 6 if : the amplitude of a given sine function fx asinxd is 6. if the maximum value of f is 8 which is the minimum value of

You are the new controller for engineered solutions the : you are the new controller for engineered solutions. the company treasurer randy patey believes that as a result of

User Account

All Pages