3 Managerial Accounting homework problems

Please see attached homework problems. Problem #3 has 3 separate requirements

Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for pricing and other purposes. The proprietor of the company believes that costs are driven primarily by the size of customer lawns, the size of customer garden beds, the distance to travel to customers, and the number of customers. In addition, the costs of maintaining garden beds depends on whether the beds are low maintenance beds (mainly ordinary trees and shrubs) or high maintenance beds (mainly flowers and exotic plants). Accordingly, the company uses the five activity cost pools listed below:

 Activity Cost Pool Activity Measure Caring for lawn Square feet of lawn Caring for garden beds–low maintenance Square feet of low maintenance beds Caring for garden beds–high maintenance Square feet of high maintenance beds Travel to jobs Miles Customer billing and service Number of customers

The company already has completed its first stage allocations of costs and has summarized its annual costs and activity as follows:

 Activity Cost Pool Estimated Overhead Cost Expected Activity Caring for lawn \$ 76,200 175,000 square feet of lawn Caring for garden beds–low maintenance \$ 28,800 30,000 square feet of low maintenance beds Caring for garden beds–high maintenance \$ 66,480 24,000 square feet of high maintenance beds Travel to jobs \$ 3,800 21,000 miles Customer billing and service \$ 7,900 40 customers

Required:

Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.)

2, Durban Metal Products, Ltd., of the Republic of South Africa makes specialty metal parts used in applications ranging from the cutting edges of bulldozer blades to replacement parts for Land Rovers. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below:

 Activity Cost Pool Activity Measure Activity Rate Order size Number of direct labor-hours \$ 17.90 per direct labor-hour Customer orders Number of customer orders \$ 368.00 per customer order Product testing Number of testing hours \$ 81.00 per testing hour Selling Number of sales calls \$ 1,495.00 per sales call

The managing director of the company would like information concerning the cost of a recently completed order for heavy-duty trailer axles. The order required 150 direct labor-hours, 20 hours of product testing, and 5 sales calls.

Required:

What is the total overhead cost assigned to the order for heavy-duty trailer axles?

3, Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:

 Xtreme Pathfinder Selling price per unit \$ 115.00 \$ 85.00 Direct materials per unit \$ 63.90 \$ 51.00 Direct labor per unit \$ 12.00 \$ 10.00 Direct labor-hours per unit 1.2 DLHs 1.0 DLHs Estimated annual production and sales 28,000 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 \$ 2,063,400 Estimated total direct labor-hours 108,600 DLHs

Required:

1. Compute the product margins for the Xtreme and the Pathfinder 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 activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):

 Estimated Overhead Cost Expected Activity Activities and Activity Measures Xtreme Pathfinder Total Supporting direct labor (direct labor-hours) \$ 673,320 33,600 75,000 108,600 Batch setups (setups) 520,000 280 240 520 Product sustaining (number of products) 790,000 1 1 2 Other 80,080 NA NA NA Total manufacturing overhead cost \$ 2,063,400

Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.

Requirement 1

Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)

 Xtreme Pathfinder Total Product margin

Requirement 2

ompute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Round your intermediate calculations to 2 decimal places.)

 Xtreme Pathfinder Total Product margin
• Required 1

Requirement 3

Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places.)

 Xtreme Pathfinder Total % of % of Amount Total Amount Amount Total Amount Amount Traditional Cost System % % % % % % Total cost assigned to products \$0 \$0 \$0 Xtreme Pathfinder Total % of % of Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs: % % % % Indirect costs: % % % % % % Total cost assigned to products \$0 \$0 \$0 Costs not assigned to products: Total cost \$0