6.2

Smoky Mountain Corporation makes two types of hiking bootsXtreme and the Pathfinder. Data concerning these two product lines appear below:

	Xtreme			Pathfinder
Selling price per unit	$	121.00			$	86.00
Direct materials per unit	$	65.30			$	52.00
Direct labor per unit	$	13.50			$	9.00
Direct labor-hours per unit		1.5	DLHs			1.0	DLHs
Estimated annual production and sales		31,000	units			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	$	2,230,000
Estimated total direct labor-hours		111,500		DLHs

Required: 1. Compute the produet margins for the Xtreme and the Pathfinder products under the company's traditional costing system. (Do not round your intermediate calculations.) Product margn 2. The company i considering replacing its traditional costing system with an activity-based costing system that would sssign ts manufacturing overhea to the following tour activity cost pools (the Other cost pool includes organzstion-sustaining costs and idle capacity and idle copacity Estmated 85.000 1.500 Supporting direat labor (direct labar-hours) Batch setups (etups) Product sustaining (number of products) Osher S 724.760 46.500 470.000 NA NA NA otal manufacturing overhead cost