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

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Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place.) Total Xtreme % of Total Amount Pathfinder % of Total Amount Amount Amount Amount $ 5,744,200 Traditional Cost System Direct materials Direct labor Manufacturing overhead Total cost assigned to products % % $ 1,656,200 228,800 600,600 $ 2,485,600 $ 4,088,000 584,000 1,533,000 $ 6,205,000 % % % % $ 5,744,200 Pathfinder Total Xtreme % of Total Amount % of Total Amount Amount Amount Amount % % $ 1,656,200 228,800 $ 4,088,000 584,000 $ 5,744,200 812,800 % % % % Activity-Based Costing System Direct costs: Direct materials Direct labor Indirect costs: Supporting direct labor Batch setups Product sustaining Total cost assigned to products Costs not assigned to products: Other Total cost % % 177,320 416,000 355,000 $ 2,833,320 452,600 352,000 355,000 $ 5,831,600 629,920 768,000 710,000 $ 8,664,920 % % 25,680 $ 8,690,600 Smoky Mountain Corporation makes two types of hiking bootsthe Xtreme and the Pathfinder. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Xtreme $ 121.00 $ 63.70 $ 8.80 1.1 DLHS 26,000 units Pathfinder $ 91.00 $ 56.00 $ 1.0 DLHS 73,000 units 8.00 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 $ 2,133,600 101,600 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 costin 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): Activities and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost Estimated Overhead Cost $ 629,920 768,000 710,000 25,680 $ 2,133,600 Expected Activity Xtreme Pathfinder Total 28,600 73,000 101,600 260 220 480 1 1 2 NA NA NA