Question

Rocky Mountain Corporation makes two types of hiking boots-Xactive and Pathbreaker. Data concerning these two product line 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 $2,750,440 131,680 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 i manufacturing overhead to the following four activity cost pools: Estimated Expected Activity Activity Cost Pools and Activity Measures Overhead Cost Xactive Pathbreaker Total Supporting direct labor (direct labor-hours) $1,013,320 47,600 84,090 131,680 Batch setups (setups) 1,053,500 295 195 490 Product sustaining (number of products) 592,760 1 1 2 General factory (machine-hours) 90,860 3,400 8,400 11,800 Total manufacturing overhead cost $2,750,440 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.) Predetem ned overhead rate per DLH < Reg 1A Req 1B >

Answer 1

Answer:

Req 1A Computation of predetermined overhead rate based on direct labor hours: $ Estimated total manufacturing overhead (A) Estimated total direct labor hours (B) Predetermined overhead rate based on direct labor hours (A)/(B) 2,750,440 131,600 20.90 $ Reg 1B Unit product cost of each product based on predetermined overhead rate $ $ Xactive Pathbreaker 65.70 $ 51.90 19.10 $ 13.90 Direct materials per unit Direct labor cost per unit Manufacturing overhead cost per unit Xactive: (1.4 DLHs x $20.90) Pathbreaker: (1 DLHs x $20.90) Unit product cost 29.26 $ $ $ 20.90 86.70 114.06 $

Req 2 Activity rate for each of the four activity costs pools: Activity Costs pools Total Expected Activity (B) Activity Rate (A)/(B) Supporting direct labor Batch Setups Product sustaining General Factory Total Manufacturing costs Estimated Overhead Costs (A) $ 1,013,320 $ 1,053,500 $ 592,760 $ 90,860 $ 2,750,440 131,600 $ 490 $ 2 $ 11,800 $ 7.70 per DLH 2,150.00 per Setup 296,380.00 per product 7.70 per MHR

Req3 Unit product costs using activity rate Xactive Pathbreaker $ 2,233,800 $ 4,359,600 $ 649,400 S 1,167,600 366,520 $ 646,800 Direct materials costs Xactive: (34000 Units x $65.70) Pathbreaker: (84,000 units x $51.90) Direct labor costs Xactive: (34000 Units x $19.10) Pathbreaker: (84,000 units x $13.90) Supporting direct labor costs Xactive: (34,000 units x 1.4 DLHs x $7.70 per DLH) Pathbreaker: (84,000 units x 1 DLHs x $7.70 per DLH) Batch Setups Costs Xactive: (295 setups x $2150 per Setup) Pathbreaker: (195 setups x $2150 per Setup) Product Sustaining Costs Xactive: (1 Product x $296,380) Pathbreaker: (1 Product x $296,380) General Factory Costs Xactive: (3400 Machine hours x $7.70 per MHR) Pathbreaker: (8400 Machine hours x $7.70 per MHR) Total Product Costs Units Unit product cost $ 634,250 $ 419,250 $ 296,380 $ 296,380 $ $ 26,180 $ 4,206,530$ 34,000 123.72 $ 64,680 6,954,310 84,000 $ 82.79