Comparing Traditional and Activity-Based Product Margins Smoky Mountain Corporation makes two types of hiking boots-Xtreme and the Pathfinder. Data concerning these two product lines appear below Xtreme Pathfinder Selling price per unit . . . . . . . . . . . . . . . Direct materials per unit $140.00 $72.00 $24.00 $99.00 $53.00 $12.00 2.0 DLHs 20,000 units 1.0 DLHs Direct labor-hours per unit Estimated annual production and sales 80,000 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 $1,980,000 . . . . . . . . hours 120,000 DLHs Required 1. Using Exhibit 7-13 as a guide, compute the product margins for the Xtreme and the Path- finder 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 Xtreme Pathfinder Total Expected Activity Activities and Activity Measures Supporting direct labor (direct labor-hours) Product sustaining (number of products) . .. $ 783,600 40,000 80,000 120,000 300 2 NA 495,000 602,400 99,000 $1,980,000 200 100 Other NA NA Total manufacturing overhead cost