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 $ 65.20 $ 51.40 Direct labor cost per unit $ 18.60 $ 13.40 Direct labor-hours per unit 1.4 DLHs 1 DLHs Estimated annual production and sales 29,000 units 79,000 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 $2,439,840 Estimated total direct labor-hours 119,600 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) $ 891,020 40,600 79,000 119,600 Batch setups (setups) 836,000 270 170 440 Product sustaining (number of products) 632,360 1 1 2 General factory (machine-hours) 80,460 2,900 7,900 10,800 Total manufacturing overhead cost $ 2,439,840

Answer 1