5 Seved Smoky Mountain Corperation Mal Help Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Xtreme Pathfinder $118.00 $ 65.00 $13.50 $ 84.00 $ 52.00 $ 9.00 Direct labor per unit Direct labor-hours per unit Estimated annual production and sales 1.5 DLHS 28,000 units 1.0 DLHS 65,000 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 Estimated total direct labor-hours $ 1,819,000 107,000 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): Activities and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost Estimated $ 588,500 Expected Activity Overhead Cost Xtreme Pathfinder 42,000 65,000 Total 107,000 690,000 398 300 690 500,000 1 1 2 NA NA NA 40,500 $1,819,000