Smoky Mountain Corporation makes two types of hiking boots-Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder Selling price per unit $147 $107 Direct materials per unit $58 $36 Direct labor per unit $20 $20 Direct labor-hrs / unit 2 DLHs 2 DLHs Est. annual production 17,000 units 68,000 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 $2,754,000 Estimated total direct labor-hours 170,000 DLHs Requirement 1: (a) Calculate the predetermined overhead rate. Predetermined overhead rate $ (b) Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. (Negative amount should be indicated by a minus sign. Round your answers to the nearest dollar amount. Omit the "$" sign in your response.) Xtreme Pathfinder Total Product margin $ ? $? $ ? Requirement 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): Expected Activity Activities and Activity Measures Estimated Overhead cost Xtreme Pathfinder Total Supporting direct labor (direct labor-hours) $1,093,100 34,000 136,000 170,000 Batch setups (setups) 471,600 130 170 300 Product sustaining (number of products) 565,500 1 1 2 Other 623,800 N/A N/A N/A Total manufacturing overhead cost $2,754,000 Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.
Xtreme Pathfinder Total Product margin $ ? $? $ ?
Requirement 3: Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your percentage values to one decimal place and round all other values to the nearest whole number. )
Xtreme Pathfinder Total Traditional Cost System Amount % Amount % Amount Direct materials $? ?% $? ?% $? Direct labor $? ?% $? ?% $?
Manufacturing overhead $? ?% $? ?% $?
Total cost assigned to products $? $? $? Activity-Based Costing System Direct costs:
Direct materials $? ?% $? ?% $?
Direct labor $? ?% $? ?% $? Indirect costs: Supporting direct labor $? ?% $? ?% $? Batch setups $? ?% $? ?% $? Product sustaining $? ?% $? ?% $? Total not assigned to products: $? $? $? Costs not assigned to products: $? Other $? Total Cost $?