Rocky Mountain Corporation makes two types of hiking boots—Xactive and the Pathbreaker. Data concerning these two product lines appear below:
 
 
Xactive
Pathbreaker
  Selling price per unit
$
127.00
 
$
89.00
 
  Direct materials per unit
$
64.80
 
$
51.00
 
  Direct labor per unit
$
18.20
 
$
13.00
 
  Direct labor-hours per unit
 
1.4
 DLHs
 
1.0
 DLHs
  Estimated annual production and sales
 
25,000
 units
 
75,000
 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
$2,200,000           
  Estimated total direct labor-hours
110,000 DLHs  
 
Required:
1.
Compute the product margins for the Xactive and the Pathbreaker products under the company’s traditional costing system. (Loss amounts should be indicated with a minus sign. Omit the "$" sign in your response.)
 
 
         Xactive
          Pathbreaker
          Total
  Product margin
$ [removed]  
$ [removed]  
$ [removed]  
 
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):
 
 
Estimated
Expected Activity
  Activities and Activity Measures
Overhead Cost
Xactive
Pathbreaker
Total
  Supporting direct labor (direct labor-hours)
$
797,500  
35,000   
75,000   
110,000  
  Batch setups (setups)
 
680,000  
250   
150   
400  
  Product sustaining (number of products)
 
650,000  
1   
1   
2  
  Other
 
72,500  
NA   
NA   
NA  
 
 
 
 
  Total manufacturing overhead cost
$
2,200,000  
 
 
 
 
 
 
 
 
Compute the product margins for the Xactive and the Pathbreaker products under the activity-based costing system. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount. Omit the "$" sign in your response.)
 
 
         Xactive
         Pathbreaker
       Total
  Product margin
$ [removed]   
$ [removed]   
$ [removed]   
 
3.
Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Do not round intermediate calculations. Round your percentage answers to one decimal place and other answers to the nearest dollar amount. Omit the "$" & "%" signs in your response.)