Assignment no 01 [production cycle] Question One

Activity and activity measures

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Assignment AIS-Production Cycle

Requirements
Question Three

Activity and activity measures	Estimated overhead costs
Expected Activity
Xtreme	Estimated overhead costs	Pathfinder	Total
Supporting direct labor (Direct labor hours)	$783,600	40,000	80,000	120,000
Batch set ups (Set ups)	495,000	200	100	300
Product sustaining (number of products)	602,400	1	1	2
Others	99,000	N/A	N/A	N/A
Totals	$1,980,000

Requirements:

Compute the total profit for the Xtreme and the Pathfinder products under the company’s traditional costing system.
Compute the total profit for the Xtreme and the Pathfinder products under the activity-based costing system.
Explain why the traditional and activity-based cost overhead assignments differ.

Question Three:

Rehm Company manufactures a product that is available in both a deluxe model and a regular model. Manufacturing overhead is assigned to products on the basis of direct labor-hours. For the current year, the company has estimated that it will incur $6,000,000 in manufacturing overhead cost and produce 15,000 units of the deluxe model and 120,000 units of the regular model. The deluxe model requires 1.6 hours of direct labor time per unit, and the regular model requires 0.8 hours. Material and labor costs per unit are as follows:

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