Required: 1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. 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 ide capacity costs: Activities and (Activity) Supporting direct labor (direct labor-hour] Product staining (number of products) Other Total manufacturing overhead Expected Activity 42,000 Overhead Coat St Pathfinder Total Eatinated $631,300 876,000 460,000 65,700 32,033,000 $5,000 101,000 320 730 2 Compute the product margins for the Xtreme and the Pathfinder products under the activity based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
Required: 1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. 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 ide capacity costs: Activities and (Activity) Supporting direct labor (direct labor-hour] Product staining (number of products) Other Total manufacturing overhead Expected Activity 42,000 Overhead Coat St Pathfinder Total Eatinated $631,300 876,000 460,000 65,700 32,033,000 $5,000 101,000 320 730 2 Compute the product margins for the Xtreme and the Pathfinder products under the activity based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 16E
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
![Smoky Mountain Corporation makes two types of hiking boots the Xtreme and the Pathfinder. Data concerning these two product
ines appear below:
Selling price per unit
Direct materials per unit
Direct labor per unit
Direct labor-hours per unit
Estimated annual production and sales
Xtreme
$ 120.00
$ 65.20
11.201
1.4 D
10,000 units
Pathfinder
$87.00
5 51.00
$8.00
1.0
65,000 unit
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
Estimated total direct labor-hours
$ 2,033,000
107,000 D
Required:
1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system.
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):
Activities and (Activity Measures)
Supporting direct labur (direct labor-hours]
Batch setups (stupe
Product sustaining (number of products)
Other
Total manufacturing overhead cont
Estimated
Overhead Coat
Expected Activity
Xtr
Pathfinder
Total
$631,300
276,000
42,000
$5,000
107,000
410
320
460,000
I
1
730
2
65,700
SA
SA
NA
$ 2,033,000
Compute the product margins for the Xtreme and the Pathfinder products under the activity based costing system.
3. Prepare a quantitative comparison of the traditional and activity based cost assignments.
Complete this question by entering your answers in the tabs below.
Required 11
Required 2 Required 3
Prepare a quantitative comparison of the traditional and activity-based cost assignments.
Note: Round your intermediate calculations to 2 decimal places and "Percentage answers to 1 decimal place.
Pathfinder
% of
Total Amount
Xtreme
% of
Total
Amount
Amount
Amount
Traditional Cost System
Total cost assigned to products
S
Total
Amount
S
D
Pathfinder
% of
Total Amount
Xtreme
% of
Total
Amount
Amount
Amount
Activity-Based Costing System
Direct costs
Indirect costs
Total cost assigned to products
Costs not assigned to products
S
Ou
S
D
Total cost
Total
Amount](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F06c7c8d5-2c04-49b7-8fe3-106e5cab0a5d%2F4728e41d-a7e0-476c-a712-10594fa4264b%2F14qu3gk_processed.png&w=3840&q=75)
Transcribed Image Text:Smoky Mountain Corporation makes two types of hiking boots the Xtreme and the Pathfinder. Data concerning these two product
ines appear below:
Selling price per unit
Direct materials per unit
Direct labor per unit
Direct labor-hours per unit
Estimated annual production and sales
Xtreme
$ 120.00
$ 65.20
11.201
1.4 D
10,000 units
Pathfinder
$87.00
5 51.00
$8.00
1.0
65,000 unit
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
Estimated total direct labor-hours
$ 2,033,000
107,000 D
Required:
1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system.
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):
Activities and (Activity Measures)
Supporting direct labur (direct labor-hours]
Batch setups (stupe
Product sustaining (number of products)
Other
Total manufacturing overhead cont
Estimated
Overhead Coat
Expected Activity
Xtr
Pathfinder
Total
$631,300
276,000
42,000
$5,000
107,000
410
320
460,000
I
1
730
2
65,700
SA
SA
NA
$ 2,033,000
Compute the product margins for the Xtreme and the Pathfinder products under the activity based costing system.
3. Prepare a quantitative comparison of the traditional and activity based cost assignments.
Complete this question by entering your answers in the tabs below.
Required 11
Required 2 Required 3
Prepare a quantitative comparison of the traditional and activity-based cost assignments.
Note: Round your intermediate calculations to 2 decimal places and "Percentage answers to 1 decimal place.
Pathfinder
% of
Total Amount
Xtreme
% of
Total
Amount
Amount
Amount
Traditional Cost System
Total cost assigned to products
S
Total
Amount
S
D
Pathfinder
% of
Total Amount
Xtreme
% of
Total
Amount
Amount
Amount
Activity-Based Costing System
Direct costs
Indirect costs
Total cost assigned to products
Costs not assigned to products
S
Ou
S
D
Total cost
Total
Amount
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