Question

Thank you

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 laborehours per unit Estimated annual production and sales Xactive $ 64.29 $ 17.60 1.4 DLHS 19,000 units $ $ Pathbreaker 50.40 12.40 1 DLHS 69,000 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 Estinated total manufacturing overhead Estimated total direct labor-hours $1,854,640 95,600 DLHS Required: 1-a. Compute the predetermined overhead rate based on direct labor-hours. 1-0. 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: Activity cost Pools and Activity Measures Supporting direct labor (oirect labor-hours) Batch Setups (setups Produce sustaining number of products General factory machine-hours) Total manufacturing overhead cost Estimated Overhead Cost 5 664,420 476,000 653,060 61,160 $1,854,640 Expected Activity Xactive Pathbreaker Total 26,660 69,000 95,600 220 120 340 1 2 1,900 6,900 3,800 Determine the activity rate for each of the four activity cost pools. 3. Using the activity rates and other data from the problem, determine the unit product cost of each product. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2 Reg 3 Compute the predetermined overhead rate based on direct labor-hours. (Round your answer to 2 decimal places.) Predetermined overhead rate per DLH Req 10 >

Answer 1

1)

a.$19.4 per DLH

predetermined overhead rate=budgeted overhead cost/budgeted activity level

budgeted overhead cost=$1854640

budgeted activity level=95600 DLHs

predetermined overhead rate=$1854640/95600=$19.4 per DLH

b.

	xactive $	pathbreaker $
direct material cost per unit	64.20	50.40
direct labour cost per unit	17.60	12.40
manufacturing overhead per unit	19.4	19.4
total unit cost	101.2	82.2

given

direct material cost per unit for xactive and pathbreaker is $64.20 and $50.40 respectively in the question.direct labour cost per unit for xactive and pathbreaker is $17.60 and $12.40 respectively in the question.manufacturing overhead per unit is $19.4 (calculation is done for above question)

2)

activity cost pool	activity rate
suporting direct labour	$6.95 per DLH
batch setups	$1400 per setup
product sustaining	$326530 per product
general factory	$6.95 per MHR

activity rate= budgeted activity overhead/total activity

for

supporting direct labour=$664420/95600=$6.95 per DLH

batch setups=$476000/340=$1400 per setup

product sustaining=$653060/2=$326530 per product

general factory=$61160/8800=$6.95 per MHR

3)

	xactive	pathbreaker
unit product cost	$125.61	$77.6

unit product cost=direct material cost per unit+direct labour cost per unit+budgeted overhead per unit of all activites.

direct material cost per unit for xactive and pathbreaker is $64.20 and $50.40 respectively in the question.direct labour cost per unit for xactive and pathbreaker is $17.60 and $12.40 respectively in the question.

supporting direct labour=$664420/95600=$6.95 per DLH

supporting direct labour per unit=$6.95*DLH per unit

for

xactive=$6.95*1.4=$9.73

pathbreaker=$6.95*1=$6.95

batch setups=$476000/340=$1400 per setup

batch setup per unit=($1400*expected activity of product)/number of units of product

for

xactive=($1400*220)/19000=$16.21

pathbreaker=($1400*120)/69000=$2.43

product sustaining=$653060/2=$326530 per product

product sustaining per unit=($326530*expected activity of product)number of units of product

for

xactive=($326530*1)/19000=$17.18

pathbreaker=($326530*1)/69000=$4.73

general factory=$61160/8800=$6.95 per MHR

general factory per unit=($6.95*expected activity of product)number of units of product

for

xactive=($6.95*1900)/19000=$0.69

pathbreaker=($6.95*6900)69000=$0.69

note:all figures are rounded upto 2 decimal points.

budgeted overhead per unit of all activites

for

xactive=$9.73+$16.21+$17.18+0.69=$43.81

pathbreaker=$6.95+$2.43+$4.73+0.69=$14.8

unit product cost=direct material cost per unit+direct labour cost per unit+budgeted overhead per unit of all activites.

for

xactive=$64.20+$17.60+$43.81=$125.61

pathbraker=$50.40+$12.40+$14.8=$77.6