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 $ 65.10 $10.50 1.4 DLHS 28,000 units Pathbreaker $ 51.30 $ 13.30 1 DLHS 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 Estimated total direct labor-hours $2,379, 160 117.200 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 manufacturing overhead to the following four activity cost pools: Estimated Overhead Cost 867,280 795,500 637, 940 78.440 - $2,379,160 Expected lativity active pathbreaker Total 3 9,200 78,000 117,200 265 165 430 Activity Cost Pools and activity Measures Supporting direct labor (direct labor-houra) Batch setups (setups ) Product sustaining number of products General factory machine-hours) Total manufacturing overhead cost 2,800 7,800 10,600 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 Req3 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.) Xactive Pathbreaker Unit product cost

Answer 1

Activity	Cost	Cost Driver		Cost per Cost driver
Supporting Direct Labor	$       867,280	117200	Direct labor hours	$                   7.40	per labor hour
Batch Setups	$       795,500	430	Setups	$          1,850.00	per setup
Product Sustaining	$       637,940	2	Products	$      318,970.00	per product
General Factory	$          78,440	10600	Machine hours	$                   7.40	per machine hour
Total	$    2,379,160

	Xactive	Pathbreaker
Direct Material	$    1,822,800	$    4,001,400
Direct Labor	$       518,000	$    1,037,400
Overhead allocated
Machine Setups	$       290,080	$       577,200
Material Handling	$       490,250	$       305,250
Quality Control	$       318,970	$       318,970
Other overhead cost	$          20,720	$          57,720
Total Overhead	$    1,120,020	$    1,259,140
Total Product Cost	$    3,460,820	$    6,297,940
Units Produced	28000	78000
Product Cost per unit	$          123.60	$            80.74