Rocky Mountain Corporation makes two types of hiking boots-Xactive and Pathbreaker. Data concerning these two product…
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Question “Rocky Mountain Corporation makes two types of hiking boots-Xactive and Pathbreaker. Data concerning these two product…”
Answer
1-a.
Calculate the overhead rate predetermined based on direct labor hours using these methods:
Predetermined overhead rate = Estimating total manufacturing overhead Total direct labor hours
= $19 per DLH
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1-b
As follows:
X Active | Pathbreaker | |
Materials directly | $63.80 | $50 |
Direct Labor | $17.20 | $12 |
Manufacturing overhead | $26.60 | $19 |
($19 x 1.45 DLHs), $19 x 1DLHs | ||
Unit product cost | $107.60 | $81.00 |
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2.
The following steps will determine the activity rate:
Activity cost pools | Estimated overhead costs (A) | Expected activity. (B) | Activity rate (A/B) | |
Supporting direct labor | $580,500 | 86000 | $6.75 | Per DLH |
Batch setups | $360,000 | 300 | $1,200.00 | Per Setup |
Product sustaining | $639,500 | 2 | $319,750.00 | Product per product |
General factory | $54,000 | 8000 | $6.75 | Per MH |
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3.
The following steps will determine the cost per unit of product:
Manufacturing overhead: | X Active | Pathbreaker | |||
Activity cost Pools | Activity Rate (A) | Expected Activity (B) | Overhead cost [C= A × B] | Expected Activity (D) | Overhead cost [E = A × D] |
Supporting direct labor | $6.75 | 21000 | $141,750 | 6500 | $43,875 |
Batch setups | $1,200 | 200 | $240,000 | 100 | $120,000 |
Product sustaining | $319,750 | 1 | $319,750 | 1 | $319,750 |
General factory | $6.75 | 1500 | $10,125 | 6500 | $43,875 |
Total | $711,625 | $527,500 | |||
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Production of units | 15000 units | 65000 units | |||
Manufacturing overhead per unit | $47.44 | $8.12 |
Conclusion
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