Rocky Mount Corporation makes two types of hiking boots—Xactive and Pathbreaker. Data concerning these two product lines appear below: Xactive Pathbreaker Direct materials costs per unit $ 65.00 $ 50.00 Direct labor cost per unit $ 21.00 $ 14.00 Direct labor hours per unit 1.5 DLH 1 DLH Estimated annual production and sales 25,000 Units 45,000 Units Average labor cost per hour $ 14.00 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 $ 2,062,500 Estimated total direct labor-hours 82,500 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 costs Expected Activity Activity Cost Pools and Activity Measures Xactive Pathbreaker Total Supporting direct labor (direct labor-hours) $ 860,000 37,500 45,000 82,500 Batch setups (setups) $ 580,000 250 150 400 Product sustaining (number of products) $ 550,000 1 1 2 General factory (machine-hours) $ 72,500 2500 7500 10,000 Total manufacturing overhead cost $ 2,062,500 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.

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.

Resource Usage and Supply, Activity Rates, Service Organization

EcoBrite Labs performs tests on water samples supplied by outside companies to ensure that their waste water meets environmental standards. Customers deliver water samples to the lab and receive the lab reports via the Internet. The EcoBrite Labs facility is built and staffed to handle the processing of 100,000 tests per year. The lab facility cost $180,000 to build and is expected to last 10 years and will have no salvage value. Processing equipment cost $290,000 and has a life expectancy of five years and will have no salvage value. Both facility and equipment are depreciated on a straight-line basis. EcoBrite Labs has six salaried laboratory technicians, each of whom is paid $35,000. In addition to the salaries, facility, and equipment, EcoBrite Labs expects to spend $50,000 for chemicals and other supplies (assuming 100,000 tests are performed). Last year, 88,000 tests were performed.

Required:

1. Classify the resources associated with the water testing activity into one of the following types: (1) committed resources and (2) flexible resources.

Committed resources:
Flexible resources:      

2. Calculate the total annual activity rate for the water testing activity. Break the activity rate into fixed and variable components. (Round your answers to three significant digits.)

3. Compute the total activity availability, and break this into activity output and unused activity.

4. Calculate the total cost of resources supplied, and break this into the cost of activity used and the cost of unused activity.

Resource Usage and Supply, Activity Rates, Service Organization

EcoBrite Labs performs tests on water samples supplied by outside companies to ensure that their waste water meets environmental standards. Customers deliver water samples to the lab and receive the lab reports via the Internet. The EcoBrite Labs facility is built and staffed to handle the processing of 100,000 tests per year. The lab facility cost $160,000 to build and is expected to last 10 years and will have no salvage value. Processing equipment cost $250,000 and has a life expectancy of five years and will have no salvage value. Both facility and equipment are depreciated on a straight-line basis. EcoBrite Labs has six salaried laboratory technicians, each of whom is paid $30,000. In addition to the salaries, facility, and equipment, EcoBrite Labs expects to spend $50,000 for chemicals and other supplies (assuming 100,000 tests are performed). Last year, 86,000 tests were performed.

Required:

1. Classify the resources associated with the water testing activity into one of the following types: (1) committed resources and (2) flexible resources.

Committed resources: Lab facility, equipment and technician salaries  
Flexible resources:      Chemicals and supplies

2. Calculate the total annual activity rate for the water testing activity. Break the activity rate into fixed and variable components. (Round your answers to the nearest cent.)

3. Compute the total activity availability, and break this into activity output and unused activity.

4. Calculate the total cost of resources supplied, and break this into the cost of activity used and the cost of unused activity.

Problem 2-16 Plantwide Predetermined Overhead Rates; Pricing [LO2-1, LO2-2, LO2-3]

Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates:

During the year, Job 550 was started and completed. The following information is available with respect to this job:

Required:

1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost of Job 550.

c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?

2. Assume that Landen’s controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost of Job 550.

c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?

(Round your intermediate calculations to 2 decimal places. Round your "Predetermined Overhead Rate" answers to 2 decimal places and all other answers to the nearest whole dollar.)

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

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:

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:

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.

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

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:

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:

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.

Combat Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi-purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours × (54,000 + 10,200)]. Expected annual manufacturing overhead is $1,558,906. Thus, the predetermined overhead rate is $16.19 or ($1,558,906 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company’s managers identified six activity cost pools and related cost drivers and accumulated overhead by cost pool as follows. Expected Use of Drivers by Product Activity Cost Pools Cost Drivers Estimated Overhead Expected Use of Cost Drivers Home Commercial Receiving Pounds $80,400 335,000 215,000 120,000 Forming Machine hours 157,500 35,000 27,000 8,000 Assembling Number of parts 390,600 217,000 165,000 52,000 Testing Number of tests 56,100 25,500 15,500 10,000 Painting Gallons 36,806 5,258 3,680 1,578 Packing and shipping Pounds 837,500 335,000 215,000 120,000 $1,558,906 Under traditional product costing, compute the total unit cost of each product. (Round answers to 2 decimal places, e.g. 12.25.) Home Model Commercial Model Total unit cost $ $ LINK TO TEXT LINK TO TEXT LINK TO TEXT Under ABC, prepare a schedule showing the computations of the activity-based overhead rates (per cost driver). (Round overhead rate to 2 decimal places, e.g. 12.25.) Activity Cost Pool Estimated Overhead Expected Use of Cost Drivers Activity-Based Overhead Rate Receiving $ Pounds $ per pound Forming Machine hours $ per machine hour Assembling Parts $ per part Testing Tests $ per test Painting Gallons $ per gallon Packing and shipping Pounds $ per pound $ LINK TO TEXT LINK TO TEXT LINK TO TEXT Prepare a schedule assigning each activity’s overhead cost pool to each product based on the use of cost drivers. (Round overhead cost per unit to 2 decimal places, e.g. 12.25 and cost assigned to 0 decimal places, e.g. 2,500.) Home Model Commercial Model Activity Cost Pool Expected Use of Drivers Activity-Based Overhead Rates Cost Assigned Expected Use of Drivers Activity-Based Overhead Rates Cost Assigned Receiving $ $ $ $ Forming $ $ Assembling $ $ Testing $ $ Painting $ $ Packing and shipping $ $ Total costs assigned (a) $ $ Units produced (b) Overhead cost per unit [(a) ÷ (b)] $ $ LINK TO TEXT LINK TO TEXT LINK TO TEXT Compute the total cost per unit for each product under ABC. (Round answer to 2 decimal places, e.g. 12.25.) Home Model Commercial Model Total cost per unit $ $ LINK TO TEXT LINK TO TEXT LINK TO TEXT Classify each of the activities as a value-added activity or a non–value-added activity. Activity Receiving Forming Assembling Testing Painting Packing and shipping

Identify and research a service business in your pathway. Using the internet, go to the company’s website and obtain their most recent (less than 2 years old) Annual Report/10K.

Write a three paragraph discussion post with the following information:

• Name of the company, in the subject line of your post.

• Why are you interested in this company?

• What industry are they in?

• What do they do specifically?

• What is the date of the most recent income statement presented, what was the net income on that statement? If the statement is in millions, state it that way.

Examples of businesses in pathways could be:

• AHCD: Dance, Theater, Film production, Social media, Graphics design or architecture business
• Business: Accounting office, caterer, advertising firm, dry cleaner, restaurant, any business is acceptable
• Education: K-12 tutoring, Child care, Charter schools
• Health Sciences: Dr. or Dentist office, PT office, Hospital, Insurance co,
• IMCT: Engineering Co., Aviation maintenance, Aviation distribution, Supply Chain Management
• Public Safety: Law office, PI, Equipment providers for the industry
• STEM: Engineering Co., Vet. Office, Computer Services co.
• SGSHS: Psychology office, Non-profit agencies, Social Media