Problem: Smoky Mountain Corporation makes two types of hiking boots-Xtreme and the Pathfinder. Date concerning these two products lines appears below:
|
|
Xtreme
|
Pathfinder
|
|
Selling price per unit
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$140.00
|
$99.00
|
|
Direct material per unit
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$72.00
|
$53.00
|
|
Direct labor per unit
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$24.00
|
$12.00
|
|
Direct labor hour per unit
|
2.0 DLHs
|
1.0 DLHs
|
|
Estimated annual production and sales
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20,000 units
|
80,000 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........................$1,980,000
Estimated total direct labor-hours................................120,000 DLHs
Required:
Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system.