Please help!! I have done the parts 1 and 2, i need help with the part 3. Smoky
ID: 2422598 • Letter: P
Question
Please help!! I have done the parts 1 and 2, i need help with the part 3.
Smoky Mountain Corporation makes two types of hiking boots-Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme $121.00 $64.70 $ 10.80 Pathfinder Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales $88.00 54.00 $9.00 1.2 DLHs 25,000 units 1.0 DLHs 71,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below: Estimated total manufacturing overhead Estimated total direct labor-hours 2,020,000 101,000 DLHs Required 1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. (Do not round your intermediate calculations.) Xtreme Pathfinder Total Product margin$ 537,500 $ 355,000 $ 892,500Explanation / Answer
Computation and allocation of overhead costs under traditional costing is as follows:
Particulars
X
P
Selling price per unit
121
88
Less:
Direct material per unit
64.7
54
Direct labour per unit
10.8
9
Manufacturing overhead
24
20
2020000/101000*1.2,1
Margin per unit
21.5
5
Units sold
25000
71000
Total margin
537500
355000
Computation and allocation of overhead costs under ABC method is as follows:
ABC Costing method:
25000
71000
Particulars
Calculation
X
%
P
%
Selling price per unit
3025000
6248000
Less:
Direct material per unit
1617500
0.57
3834000
0.69
Direct labour per unit
270000
0.10
639000
0.12
Manufacturing overhead:
Supporting labor
606000/101000*0.3,0.7
180000
0.06
426000
0.08
Batch set ups
693000/630*4,3
396000
0.14
297000
0.05
Product sustaining
350000
0.12
350000
0.06
Others
10500
0.00
10500
0.00
Total costs
2824000
5556500
Margin
201000
691500
Particulars
X
P
Selling price per unit
121
88
Less:
Direct material per unit
64.7
54
Direct labour per unit
10.8
9
Manufacturing overhead
24
20
2020000/101000*1.2,1
Margin per unit
21.5
5
Units sold
25000
71000
Total margin
537500
355000