Solution 1:
Overhead Allocation - Traditional Costing System | |||
Particulars | Xtreme | Pathfinder | Total |
Estimated annual Production (In units) | 25000 | 71000 | |
Direct Labour Hours Per unit | 1.6 | 1 | |
Total Direct Labour Hours | 40000 | 71000 | 111000 |
Overhead Cost Allocation basis direct labor hours (Overhead / Total hours * Labor hours of model) | $840,000.00 | $1,491,000.00 | $2,331,000.00 |
Manufacturing overhead cost per unit (Allocated Overhead / Nos of units) | $33.60 | $21.00 |
Computation of Product Margin - Traditional Costing System | |||
Particulars | Xtreme | Pathfinder | Total |
Selling price per unit | $125.00 | $91.00 | |
Direct material per unit | $64.20 | $55.00 | |
Direct labor per unit | $16.00 | $10.00 | |
Manufacturing overhead cost per unit | $33.60 | $21.00 | |
Product Margin per unit | $11.20 | $5.00 | |
Nos of units sold | 25000 | 71000 | |
Total Margin (Product margin per unit * Nos of unit sold) | $280,000.00 | $355,000.00 | $635,000.00 |
Solution 2:
Determination of activity rate for each activity & allocation of overhead | ||||||||
Activity | Estimated Overhead Cost | Activity Base | Usage of Activity Base | Activity Rate | Xtreme | Pathfinder | ||
Usage | Allocated Costs | Usage | Allocated Costs | |||||
Supporting direct labor cost | $888,000.00 | Direct Labor hours | 111000 | $8.00 | 40000 | $320,000.00 | 71000 | $568,000.00 |
Batch Setups | $583,000.00 | Setups | 530 | $1,100.00 | 310 | $341,000.00 | 220 | $242,000.00 |
Product sustaining | $780,000.00 | Number of products | 2 | $390,000.00 | 1 | $390,000.00 | 1 | $390,000.00 |
Other | $80,000.00 | No allocation | ||||||
Total | $2,331,000.00 | $1,051,000.00 | $1,200,000.00 | |||||
Nos of units | 25000 | 71000 | ||||||
Allocated overhead per unit | $42.04 | $16.90 |
Computation of Product Margin - Activity based Costing System | |||
Particulars | Xtreme | Pathfinder | Total |
Selling price per unit | $125.00 | $91.00 | |
Direct material per unit | $64.20 | $55.00 | |
Direct labor per unit | $16.00 | $10.00 | |
Allocated Manufacturing overhead cost per unit | $42.04 | $16.90 | |
Product Margin per unit | $2.76 | $9.10 | |
Nos of units sold | 25000 | 71000 | |
Total Margin (Product margin per unit * Nos of unit sold) | $69,000.00 | $646,000.00 | $715,000.00 |
Solution 3:
Quantity comparison of traditional cost assignment | |||||
Particulars | Xtreme | Pathfinder | Total | ||
Amount | % of total Amount | Amount | % of total Amount | Amount | |
Direct Material Cost | $1,605,000.00 | 29.1% | $3,905,000.00 | 70.9% | $5,510,000.00 |
Direct Labor Cost | $400,000.00 | 36.0% | $710,000.00 | 64.0% | $1,110,000.00 |
Manufacturing Overhead cost | $840,000.00 | 36.0% | $1,491,000.00 | 64.0% | $2,331,000.00 |
Total Cost assigned to Product | $2,845,000.00 | $6,106,000.00 | $8,951,000.00 |
Quantity comparison of Activity Based cost assignment | |||||
Particulars | Xtreme | Pathfinder | Total | ||
Amount | % of total Amount | Amount | % of total Amount | Amount | |
Direct Cost: | |||||
Direct Material Cost | $1,605,000.00 | 29.1% | $3,905,000.00 | 70.9% | $5,510,000.00 |
Direct Labor Cost | $400,000.00 | 36.0% | $710,000.00 | 64.0% | $1,110,000.00 |
Indirect Cost: | |||||
Supporting direct labor cost | $320,000.00 | 36.0% | $568,000.00 | 64.0% | $888,000.00 |
Batch Setups | $341,000.00 | 58.5% | $242,000.00 | 41.5% | $583,000.00 |
Product sustaining | $390,000.00 | 50.0% | $390,000.00 | 50.0% | $780,000.00 |
Total Cost Assigned to Products | $3,056,000.00 | $5,815,000.00 | $8,871,000.00 | ||
Cost not assigned to products: | |||||
Others | $80,000.00 | ||||
Total Cost | $8,951,000.00 |
Problem 7-17 Comparing Traditional and Activity-Based Product Margins (L07-1, LO7-3, LO7-4, LO7-5) Smoky Mountain Corporation makes...
Problem 7-17 Comparing Traditional and Activity-Based Product Margins [L07-1, LO7-3, LO7-4, LO7-5] Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder $ 91.00 $ 50.00 $ 130.00 $ 64.30 $ 11.20 Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales 8.00 1.4 DLHS 1.0 DLHS 21,000 units 72,000 units The company has a traditional...
Problem 7-17 Comparing Traditional and Activity-Based Product Margins (L07-1, LO7-3, L07-4, LO7-5) Smoky Mountain Corporation makes two types of hiking boots--the Xtreme and the Pathfinder Data concerning these two product lines appear below: points Xtreme $123.00 $ 63.80 $ 10.80 1.2 DLHS 27,000 units Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales $ $ Pathfinder 86.ee 50.00 9.89 1.0 DLHS 74,000 units The company has a traditional...
Problem 7-17 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4, LO7-5] Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Xtreme $ 116.00 $ 64.00 $ 12.00 1.5 DLHS 29,000 units $ $ $ Pathfinder 80.00 52.00 8.00 1.0 DLHS 76,000 units The company has a...
Problem 7-17 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4, LO7-5] Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Xtreme $ 132.00 $ 64.60 $ 9.60 1.2 DLHS 24,000 units $ $ $ Pathfinder 94.00 53.00 8.00 1. O DLHs 70,000 units The company has...
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Problem 5-17 (Algo) Comparing Traditional and Activity-Based Product Margins (LO5-1, LO5-3, LO5-4, LO5-5) Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Xtreme $ 120.00 $ 63.60 $ 12.00 1.2 DLHS 25,000 units Pathfinder $ 87.00 $ 55.00 $ 10.00 1.0 DLHS 72,000 units The company has...
Problem 5-17 (Algo) Comparing Traditional and Activity-Based Product Margins [LO5-1, L05-3, LO5-4, LO5-5] Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Xtreme $ 121.00 $ 65.30 $ 13.50 1.5 DLHS 31,000 units $ $ $ Pathfinder 86.00 52.00 9.00 1.0 DLHS 65,000 units The company has...
Thanks for the help and your time! Problem 7-17 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4, LO7-5) Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder Data concerning these two product lines appear below: Fathunder $ 91.00 Selling price per unit Direct materiale per unit Direct labor per unit Direct laber-hours per unit Estimated annual production and wales $126.00 63.20 $31.70 1.3 DLHE 21,000 units $ 9.00 2.0 DLHS 75,000 units The company has...
PROBLEM 7-17 Comparing Traditional and Activity-Based Product Margins 07-L07-3, 1107-4 107-5 Smoky Mountain Cerpen makes two types of biking both Xtreme and the Pind Detector les appear Xentre Pune Selling price per $140.00 $99.00 Direct mails per 72.00 $55.00 Direct labore $24.00 Duet abbons per 20 DLH 1. DIE Estimated products and a 20.000 30.000 $12.00 The company has a total costing systems in which manufacturing overheadsed to directores De Coming vechead and direct laborhoors for the below Estimated to...
Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Xtreme $ 125.00 $ 64.20 $ 16.00 1.6 DLHS 25,000 units Pathfinder $ 91.00 $ 55.00 $ 10.00 1.0 DLHS 71,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based...