Rocky Mountain Corporation makes two types of hiking boots-Xactive and the Pathbreaker. Data concerning these two product lines appear below:
|
Xactive |
Pathbreaker |
| Direct materials per unit |
$ |
65.80 |
|
$ |
52.00 |
|
| Direct labor cost per unit |
$ |
19.20 |
|
$ |
14.00 |
|
| Direct labor-hours per unit |
|
1.4 |
DLHs |
|
1 |
DLHs |
| Estimated annual production and sales |
|
35,000 |
units |
|
85,000 |
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 |
$2,814,000 |
|
| Estimated total direct labor-hours |
134,000 |
DLHs |
|
| 1-a. |
Compute the predetermined overhead rate based on direct labor-hours. (Round the intermediate calculations and final answer to two decimal places.) |
| Predetermined overhead rate |
$ per DLH |
| 1-b. |
Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product. (Round the intermediate calculations and final answer to two decimal places.) |
|
Xactive |
Pathbreaker |
| Unit product cost |
$ |
$ |
|
| 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 |
|
|
|
|
| Activities and Activity Measures |
Xactive |
Pathbreaker |
Total |
| Supporting direct labor (direct labor-hours) |
$ |
1,038,500 |
49,000 |
85,000 |
134,000 |
| Batch setups (setups) |
|
1,100,000 |
300 |
200 |
500 |
| Product sustaining (number of products) |
|
582,500 |
1 |
1 |
2 |
| General factory (machine-hours) |
|
93,000 |
3,500 |
8,500 |
12,000 |
|
|
|
|
|
|
| Total manufacturing overhead cost |
$ |
2,814,000 |
|
|
|
|
|
|
|
|
|
|
|
Determine the activity rate for each of the four activity cost pools. (Round your final answers to 2 decimal places.) |
| Activity Cost Pools |
Activity Rate |
| Supporting direct labor |
$ |
per DLH |
| Batch setups |
$ |
per setup |
| Product sustaining |
$ |
per product |
| General factory |
$ |
per MH |
|
| 3. |
Using the activity rates and other data from the problem, determine the unit product cost of each product. (Round the intermediate calculations and final answer to two decimal places.)
|
|
Xactive |
Pathbreaker |
| Unit product cost |
$ |
$ |