San Diego State University Operations And Supply Chain Management Assignment Help - Products

Question - Smoky Mountain Corporation makes two types of hiking boots"Xtreme and the Pathfinder. 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 ...Read More

Requirement 1:
(a)
Calculate the predetermined overhead rate. (Round your answer to 2 decimal places. Omit the "$"
sign in your response.)

Predetermined overhead rate $

(b)
Compute the product margins for the Xtreme and the Pathfinder products under the company's
traditional costing system. (Negative amount should be indicated by a minus sign. Round your
predetermined overhead rate to 2 decimal places. Round your answers to the nearest dollar amount.
Omit the "$" sign in your response.)

Xtreme
Product margin - ?

Pathfinder
Product margin - ?

Requirement 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 Xtreme and the Pathfinder products under the activity-based
costing system. (Negative amount should be indicated by a minus sign. Do not round your
intermediate calculations. Omit the "$" sign in your response.)

Xtreme
Product margin - ?

Pathfinder
Product margin -?

Requirement 3:
Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Do not
round your intermediate calculations. Round your predetermined overhead rate to 2 decimal places.

Round your percentage values to 1 decimal places and round all other values to the nearest whole
number. Omit the "$" & "%" signs in your response.)


Xactive Pathbreaker Total
Amount
% of
Total
Amount
Amount
% of
Total
Amount
Amount
Traditional Cost System
(Click to select)Supporting
direct laborSelling and
administrativeOtherDirect
materialsBatch
setupsProduct sustaining
$ % $ % $
(Click to select)Direct
laborBatch
setupsOtherProduct
sustainingSelling and
administrativeSupporting
direct labor
% %
(Click to
select)OtherManufacturing
overheadSelling and
administrativeProduct
sustainingBatch
setupsSupporting direct
labor
% %

Total cost assigned to
products $ $ $







Activity-Based Costing
System
Direct costs:
(Click to select)Batch
setupsSelling and
administrativeSupporting
direct laborProduct
$ % $ % $

sustainingDirect
materialsManufacturing
overhead
(Click to select)Supporting
direct laborBatch
setupsSelling and
administrativeManufacturing
overheadProduct
sustainingDirect laborOther
% %
Indirect costs:
(Click to select)Direct
laborOtherSelling and
administrativeManufacturing
overheadDirect
materialsSupporting direct
labor
% %
(Click to
select)Manufacturing
overheadOtherSelling and
administrativeBatch
setupsDirect laborDirect
materials
% %
(Click to select)OtherSelling
and administrativeDirect
laborManufacturing
overheadProduct
sustainingDirect materials
% %

Total cost assigned to
products $ $ $





Costs not assigned to
products:
(Click to select)Direct
laborDirect
materialsSupporting direct
laborBatch
setupsOtherProduct
sustaining

Total cost $ ...Read Less

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