question archive Rocky Mountain Corporation makes two types of hiking boots Xactive and the Pathbreaker
Rocky Mountain Corporation makes two types of hiking boots Xactive and the Pathbreaker
Subject:AccountingPrice:2.87 Bought7
| 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 | $ | 64.60 | $ | 50.80 | ||
| Direct labor cost per unit | $ | 18.00 | $ | 12.80 | ||
| Direct labor-hours per unit | 1.4 | DLHs | 1.0 | DLHs | ||
| Estimated annual production and sales | 23,000 | units | 73,000 | 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 | $2,082,960 | |
| Estimated total direct labor-hours | 105,200 | DLHs |
| Required: | |
| 1-a. | Compute the predetermined overhead rate based on direct labor-hours. |
| 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. |
| 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: |
| Activities and Activity Measures | Estimated Overhead Cost |
Expected Activity | ||||
| Xactive | Pathbreaker | Total | ||||
| Supporting direct labor (direct labor-hours) | $ | 752180 | 32200 | 73,000 | 105,200 | |
| Batch setups (setups) | 608,000 | 240 | 140 | 380 | ||
| Product sustaining (number of products) | 654,140 | 1 | 1 | 2 | ||
| General factory (machine-hours) | 68,640 | 2,300 | 7,300 | 9,600 | ||
| Total manufacturing overhead cost | $ | 2,082,960 | ||||
| Determine the activity rate for each of the four activity cost pools.(Round your 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. (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
| Xactive | Pathbreaker | |
| Unit product cost | $ | $ |
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Answer:
1-a. Predetermined overhead rate = $2082960/105200 = $19.80 per DLH
1-b.
| Xactive | Pathbreaker | |
| Direct materials | 64.60 | 50.80 |
| Direct labor | 18.00 | 12.80 |
| Manufacturing overhead | 27.72 | 19.8 |
| (1.4 x $19.80) | (1 x $19.80) | |
| Unit product cost $ | 110.32 | 83.40 |
2.
| Activity Cost Pools | Estimated Overhead Cost $ | Expected Activity | Activity Rate | |
| Supporting direct labor | 752180 | 105200 | 7.15 | per DLH |
| Batch setups | 608000 | 380 | 1600 | per setup |
| Product sustaining | 654140 | 2 | 327070 | per product |
| General factory | 68640 | 9600 | 7.15 | per MH |
3.
| Xactive | Pathbreaker | |
| Direct materials | 64.60 | 50.80 |
| Direct labor | 18.00 | 12.80 |
| Manufacturing overhead | 41.64 | 15.41 |
| Unit product cost $ | 124.24 | 79.01 |
| Manufacturing overhead: | Xactive | Pathbreaker | |||
| Activity Cost Pools | Activity Rate $ | Expected Activity | Overhead cost $ | Expected Activity | Overhead cost $ |
| Supporting direct labor | 7.15 | 32200 | 230230.00 | 73000 | 521950.00 |
| Batch setups | 1600 | 240 | 384000.00 | 140 | 224000.00 |
| Product sustaining | 327070 | 1 | 327070.00 | 1 | 327070.00 |
| General factory | 7.15 | 2300 | 16445.00 | 7300 | 52195.00 |
| 957745.00 | 1125215.00 | ||||
| Number of units produced | 23000 | 73000 | |||
| Manufacturing overhead per unit $ | 41.64 | 15.41 | |||
