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 $ 65.70 $ 19.10 1.4 DLHS 34,000 units Pathbreaker $ 51.90 $ 13.90 1 DLHS 84,000 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 $2,750, 440 131,600 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

Answer 1

Sol

la Predetermined Overhead rate based on labor hour Total manufacturing Overheads (a) Direct labor hours (b) Predetermined Overhead rate based on labor hour c=(a/b) $ 2,750,440.00 131,600.00 =34000*1.4+84000 $ 20.90 per DLH 1b Unit product Cost using Predetermined Overhead rate based on labor hour Particulars Xactive Pathbreaker Direct labor hours per unt (d) 1.40 Predetermined Overhead rate per hour (c) $ 20.90$ 1.00 20.90 $ 29.26 $ 20.90 $ 51.90 Overhead cost per unit (e=cd) Direct Material per unit (f) Direct Labor cost per unit (g) Unit product cost (e+f+g) $ 65.70$ 19.10 $ 114.06 $ 13.90 $ 86.70 Unit product cost Xactive Pathbreaker 114.06 $ per unit 86.70 $ per unit

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