need 1,2,3 question ans PROBLEM 7-17 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4,LO7-5)Smoky Mountain Corporation makes two types of hiking boots-Xtreme and the Pathfinder. Dataconcerning these two product lines appear below:XtremePathfinderSelling price per unit ...Direct materials per unitDirect labor per unit .Direct labor-hours per unitEstimated annual production and sales$140.00$72.00$24.00$99.00$53.00$12.00...2.0 DLHS1.0 DLHS20,000 units 80,000 unitsThe company has a traditional costing system in which manufacturing overhead is applied to unitsbased on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours forthe upcoming year appear below:Estimated total manufacturing overheadEstimated total direct labor-hours......$1,980,000120,000 DLHSRequired:1. Using Exhibit 7-13 as a guide, compute the product margins for the Xtreme and the Path-finder products under the company's traditional costing system.2. The company is considering replacing its traditional costing system with an activity-basedcosting system that would assign its manufacturing overhead to the following four activ-ity cost pools (the Other cost pool includes organization-sustaining costs and idle capacitycosts):Expected ActivityOverhead Cost Xtreme Pathfinder TotalEstimatedActivities and Activity Measures$ 783,600495,000602,40099,00080,000120,000300Supporting direct labor (direct labor-hours)Batch setups (setups)......Product sustaining (number of products)Other....40,00020010011NANANATotal manufacturing overhead cost$1,980,000Using Exhibit 7-1l as a guide, compute the product margins for the Xtreme and the Path-finder products under the activity-based costing system.3. Using Exhibit 7-14 as a guide, prepare a quantitative comparison of the traditional andactivity-based cost assignments. Explain why the traditional and activity-based cost assign-ments differ.

Answered: PROBLEM 7-17 Comparing Traditional and…

PROBLEM 7-17 Comparing Traditional and Activity L07-5) Smoky Mountain Corporation makes two types of concerning these two product lines appear below:

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.4C: Variable costs and activity bases in decision making The owner of Dawg Prints, a printing company,...

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PROBLEM 7-17 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4,
LO7-5)
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 ...
Direct materials per unit
Direct labor per unit .
Direct labor-hours per unit
Estimated annual production and sales
$140.00
$72.00
$24.00
$99.00
$53.00
$12.00
...
2.0 DLHS
1.0 DLHS
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
Estimated total direct labor-hours......
$1,980,000
120,000 DLHS
Required:
1. Using Exhibit 7-13 as a guide, compute the product margins for the Xtreme and the Path-
finder products under the company's traditional costing system.
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 activ-
ity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity
costs):
Expected Activity
Overhead Cost Xtreme Pathfinder Total
Estimated
Activities and Activity Measures
$ 783,600
495,000
602,400
99,000
80,000
120,000
300
Supporting direct labor (direct labor-hours)
Batch setups (setups)......
Product sustaining (number of products)
Other....
40,000
200
100
1
1
NA
NA
NA
Total manufacturing overhead cost
$1,980,000
Using Exhibit 7-1l as a guide, compute the product margins for the Xtreme and the Path-
finder products under the activity-based costing system.
3. Using Exhibit 7-14 as a guide, prepare a quantitative comparison of the traditional and
activity-based cost assignments. Explain why the traditional and activity-based cost assign-
ments differ.

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