Question

Rocky Mountain Corporation makes two types of hiking boots—Xactive and Pathbreaker. Data concerning these two product lines appear below:

	Xactive			Pathbreaker
Direct materials per unit	$	65.10		$	51.30
Direct labor cost per unit	$	18.50		$	13.30
Direct labor-hours per unit		1.4	DLHs		1	DLHs
Estimated annual production and sales		28,000	units		78,000	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	$2,379,160
Estimated total direct labor-hours	117,200	DLHs

	Estimated Overhead Cost			Expected Activity
Activity Cost Pools and Activity Measures				Xactive			Pathbreaker			Total
Supporting direct labor (direct labor-hours)	$	867,280			39,200			78,000		117,200
Batch setups (setups)		795,500			265			165		430
Product sustaining (number of products)		637,940			1			1		2
General factory (machine-hours)		78,440			2,800			7,800		10,600
Total manufacturing overhead cost	$	2,379,160

What is the POR?

predetermined overhead rate _____________

Determine the activity rate for each of the four activity cost pools. (Round your "per DLH" and "per MHR" answers to 2 decimal places.)

Activity Cost Pools Supporting direct labor Batch setups Product sustaining General factory Activity Rate per DLH per setup per product per MHR

Using the activity rates and other data from the problem, determine the unit product cost of each product. (Round your intermediate calculations and final answers to 2 decimal places.)

Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product. (Round your intermediate calculations and final answers to 2 decimal places.)

unit product cost xactive __________

unit product cost pathbrakeer _______

Answer 1

Direct Material Direct Labor Dirct Labou hour Per unit Estimated Production Working Notes Xactive 65.10 18.50 1.40 28000 PathBreaker 51.30 13.30 1.00 78000 Estimated MOH Estimated Labor hours Predetermined Overhead Rate 2379160 117200 20.30 2070000/90000 Xactive Path Breaker Total Total Direct Labor Hours = (Units * Direct Labor Hour) 39200 78000 117200 Traditional Costing System Xactive Direct Material = Units * DM Rate 1822800 Direct Labor= Units * DL Rate 518000 Manufacturing Overheads 795760 Total Manufacturing Cost 3136560 Total Units 28000 Units Product Cost= Totalcost / Units 112.02 PathBreaker 4001400 1037400 1583400 66222001 78000 84.90

Determination of Activity Rate Activty Pool Estimated OH Supporing direct Labor 867280 Batch setup 795500 Prodcut Sustainind 637940 General Factory 78440 2379160 Base 117200 430 2 10600 Activity Rate 7.40 = 1850.00 318970.00 = 7.40 = = 867280 / 117200 795500 / 430 637940 / 2 78440 / 10600 Activity Based Costing System Xactive PathBreaker Direct Material 1822800 4001400 Direct Labor 518000 1037400 Supporing direct Labor 290080 577200 Batch setup 490250 305250 Prodcut Sustainind 318970 318970 General Factory 20720 57720 Total Manufacturing Cost 3460820 6297940 Total Units 28000 78000 Units Product Cost= Totalcost / Units 123.60 80.74 3460820/28000 6297940/7800

Answers Predetermined Overhead Rate 20.30 PerDLH Xactive PathBreaker Units Prodcut cost (Using Predetermiend Rate) 112.02 84.90 Activity Cost Pool Activity Rate Supporing direct Labor 7.40 Per DLH Batch setup 1850.00 Per setup Prodcut Sustainind 318970.00 Per Number of Prodcut General Factory 7.40 Per MH Xactive PathBreaker 3. Unit Prodcut cost ( Activity Based) 123.60 80.74