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mash [69]
3 years ago
9

Problem 7-17 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4, LO7-5] Smoky Mountain Corporation ma

kes two types of hiking boots—Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder Selling price per unit $ 140.00 $ 99.00 Direct materials per unit $ 72.00 $ 53.00 Direct labor per unit $ 24.00 $ 12.00 Direct labor-hours per unit 2.0 DLHs 1.0 DLHs Estimated annual production and sales 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.
Business
1 answer:
Gelneren [198K]3 years ago
4 0

Answer:

product margins for the Xtreme and the Pathfinder is 7.9% and 17.7% respectively.

Explanation:

Estimated total manufacturing overhead $1,980,000 Estimated total direct labor-hours 120,000 DLHs, then manufacturing overhead per hour is $33 = 1,980,000/120,000 = $16.5

Please see the detailed calculation in excel attached.

Download xlsx
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ERIC: Hi, Hubert. This is my first economics course, and many of the concepts discussed in class are really confusing. Today the
Ymorist [56]

Answer:

ERIC: Hi, Hubert. This is my first economics course, and many of the concepts discussed in class are really confusing. Today the professor explained that the true cost of going to college includes both the tuition I pay as well as something called the "opportunity cost" of going to college. I don't understand. I pay $32,000 per year in tuition. The tuition is what I pay to the school, so it seems like that should be my true cost!

HUBERT: Hi, Eric. Many concepts in economics can be confusing at first. Let's talk it through.

Economists think of costs a bit differently than just the dollar amount that you pay. To an economist, the true cost of college includes the total value of what you give up in order to acquire your college education. In other words, not only did you give up the tuition money that you paid, but by attending college, you gave up opportunities to do other things with your time as well. This is where the idea of opportunity cost comes from.

The opportunity cost of your decision to go to college is the value of the next best alternative that you gave up. Suppose that your next best alternative to college is to work as a cashier. By not going to college, and taking this job, you could earn $16,000 per year. Then your opportunity cost of college is <u>$16,000</u>, and your total cost of a year of college is <u>$48,000</u> per year.

ERIC: I think I get it now. So when I take into account the opportunity cost of college, the true cost is actually <u>more </u>than just the tuition.

HUBERT: Correct. Thinking about costs in this way will help you make more rational decisions in your everyday life. Now tell me, how can you explain your decision to go to college?

ERIC: I chose to go to college because, for me, the value of a year in college <u>gives me a higher stand and offers me a better long-term opportunity that someone without a college degree.</u>

Explanation:

The question poses a discussion about the opportunity cost of attending college. The understanding behind this is that by choosing to go to college, Eric is forfeiting the opportunity to get a job as a cashier that would earn him $16,000 a year while incurring his college fees of $32,000. Therefore, the total cost of attending college to him should be $48,000.

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Explanation:

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Answer:

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3 years ago
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Answer:

The answer is: Garnett Co.'s net income is $7,600

Explanation:

To determine the net income we must first calculate the cost of goods sold and the commissions paid:

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Now we can elaborate the following income statement for Garnett Co.

Total sales                     $32,000

COGS                             ($20,000)

Commissions                 ($3,200)

<u>Advertising expense     ($1,200)    </u>

Net income                    $7,600

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