Question

Rocky Mountain Corporation makes two types of hiking boots—Xactive and Pathbreaker. Data concerning these two product lines appear below: Xactive Pathbreaker Direct materials per unit $ 64.40 $ 50.60 Direct labor cost per unit $ 17.80 $ 12.60 Direct labor-hours per unit 1.4 DLHs 1 DLHs Estimated annual production and sales 21,000 units 71,000 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 $1,967,840 Estimated total direct labor-hours 100,400 DLHs Required: 1-a. Compute the predetermined overhead rate based on direct labor-hours. 1-b. Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product. 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 Activity Cost Pools and Activity Measures Xactive Pathbreaker Total Supporting direct labor (direct labor-hours) $ 707,820 29,400 71,000 100,400 Batch setups (setups) 540,000 230 130 360 Product sustaining (number of products) 655,160 1 1 2 General factory (machine-hours) 64,860 2,100 7,100 9,200 Total manufacturing overhead cost $ 1,967,840 Determine the activity rate for each of the four activity cost pools. 3. Using the activity rates and other data from the problem, determine the unit product cost of each product.

Answer 1