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Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit. Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Estimated total manufacturing overhead Estimated total direct labor-hours Xtreme $ 121.00 $ 65.30 $13.50 1.5 DLHS 31,000 units Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost Activities and Activity Measures Supporting direct labor (direct labor-hours) Pathfinder 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: $ 86.00 $ 52.00 $ 9.00 1.0 DLHS 65,000 units 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): $ 2,230,000 111,500 DLHS Estimated Overhead Cost Expected Activity Xtreme Pathfinder $ 724,750 46,500 65,000 975,000 420 330 470,000 1 1 60,250 ΝΑ ΝΑ $ 2,230,000 Total 111,500 750 2 ΝΑ 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.

Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit. Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Estimated total manufacturing overhead Estimated total direct labor-hours Xtreme $ 121.00 $ 65.30 $13.50 1.5 DLHS 31,000 units Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost Activities and Activity Measures Supporting direct labor (direct labor-hours) Pathfinder 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: $ 86.00 $ 52.00 $ 9.00 1.0 DLHS 65,000 units 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): $ 2,230,000 111,500 DLHS Estimated Overhead Cost Expected Activity Xtreme Pathfinder $ 724,750 46,500 65,000 975,000 420 330 470,000 1 1 60,250 ΝΑ ΝΑ $ 2,230,000 Total 111,500 750 2 ΝΑ 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.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter5: Process Costing
Section: Chapter Questions
Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...
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Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Estimated total manufacturing overhead Estimated total direct labor-hours Xtreme $ 121.00 $ 65.30 $ 13.50 1.5 DLHS 31,000 units Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost 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: Activities and Activity Measures Supporting direct labor (direct labor-hours) Pathfinder $ 86.00 $ 52.00 $ 9.00 1.0 DLHS 65,000 units 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): $ 2,230,000 111,500 DLHS Estimated Overhead Cost $ Expected Activity Xtreme Pathfinder 724,750 46,500 65,000 975,000 420 330 470,000 1 1 60,250 ΝΑ ΝΑ $ 2,230,000 Total 111,500 750 2 ΝΑ 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.
Transcribed Image Text:Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Estimated total manufacturing overhead Estimated total direct labor-hours Xtreme $ 121.00 $ 65.30 $ 13.50 1.5 DLHS 31,000 units Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost 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: Activities and Activity Measures Supporting direct labor (direct labor-hours) Pathfinder $ 86.00 $ 52.00 $ 9.00 1.0 DLHS 65,000 units 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): $ 2,230,000 111,500 DLHS Estimated Overhead Cost $ Expected Activity Xtreme Pathfinder 724,750 46,500 65,000 975,000 420 330 470,000 1 1 60,250 ΝΑ ΝΑ $ 2,230,000 Total 111,500 750 2 ΝΑ 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.
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