Rocky Mountain Corporation makes two types of hiking bootsXactive and the Pathbreaker. Data concerning these two product
Question:
Data concerning these two product lines appear below:
The company has a traditional 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 . . . . . . . . . . $2,200,000
Estimated total direct labor-hours . . . . . . . . . . . . . . . . 110,000 DLHs
Required:
1. Using Exhibit 712 as a guide, compute the product margins for the Xactive and the Path-breaker products under the companys traditional costing system.
2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):
Using Exhibit 710 as a guide, compute the product margins for the Xactive and the Pathbreaker products under the activity-based costing system.
3. Using Exhibit 713 as a guide, prepare a quantitative comparison of the traditional and activity-based cost assignments. Explain why the traditional and activity-based cost assignmentsdiffer.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Managerial Accounting
ISBN: 978-0078111006
14th edition
Authors: Ray Garrison, Eric Noreen and Peter Brewer