The company has a conventional costing system in which manufacturing overhead is
ID: 2492742 • Letter: T
Question
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:
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:
Using the activity rates and other data from the problem, determine the unit product cost of each product. (Round the intermediate calculations and final answer to two decimal places.)
Rocky Mountain Corporation makes two types of hiking boots—Xactive and Pathbreaker. Data concerning these two product lines appear below:Explanation / Answer
1 a) overhead rate based on direct labor-hours = $ 2,501,000/122,000 DLHs = $ 20.50 per DLHs
1 b)
2.
3.
Xactive($) Pathbreaker($) Direct materials per unit 65.30 51.50 Direct labor cost per unit 18.70 13.50 Manufacturing overhead; Xactive (1.4 DLHs x $ 20.50) 28.70 Pathbreaker( 1 DLHs x $ 20.5) - 20.50 Unit product cost 112.70 85.50