Question

Rocky Mountain Corporation makes two types of hiking boots-Xactive and Pathbreaker. Data concerning these two product lines appear below: Direct materials per unit Direct labor cost per unit Direct labor-hours per unit Estimated annual production and sales Xactive $ 64.70 $ 18.10 1.4 DLE 24,000 units Pathbreaker $ 50.90 $ 12.90 1 DL 74,000 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 Estimated total direct labor-hours $2,141,240 107,600 DL 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: < Prev 6 of 6 II Next

Answer 1

Page No.: Date : 1 1 In the above example pinit product costs as pese traditional conventional system are 27:863 and 19.98 Sespectively whereas for under ABC System they are ut 41.32$ and 15:59 $ respectively