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Smoky Mountain Corporation makes two types of hiking boots--the Xtreme and the Pathfinder. Data concerning these two product
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. 3. Prepare a
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Answer #1

Requirement 1:

Predetermined overhead rate = $2,331,000/111,000 = $21 per hour

Computation of Product Margin
Particulars Xtreme Pathfinder Total
Selling price per unit 125 91
Direct material per unit 64.20 55
Direct labor per unit 16 10
Manufacturing overhead cost per unit (Direct labour hours per unit*$21) 33.60 21
Product Margin per unit (A) 11.20 5
No. of units sold (B) 25,000 71,000
Total Margin (A*B) 280,000 355,000 635,000

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