EXERCISE 3-10 Contrasting ABC and Conventional Product Costs [LO2, LO,LO Roxky Mountain Corporation makes two tyres of hiking boots-Xactive and Pathbreaker. Data cnncern ing these two product lines appear below: Xactive $84.80 $18 20 $51.00 $13.00 Direct materials per unit Direct labor cost per unit Direct labor-hours per unit Estmated annual production and sales2 14 DLHs 1.0 DLHs 25.000 units 75,000 units The company has a coeventional costing system in which manufacturing overhead is applied to units based on direct labor hours. Data concerning manufacturing overhead and darect labor-hours for the upcoming year appear below Estimated total manufacturing overhead Estimated total direct labor-hours. 110,000 DLHs Required I. Compute the prodetennined overbcad rate based on direct labor-hours Using this rate and other data from the problem, detcrmine the unit prmduct cost of each product 2. The company is considering replacing its coeventional costing system with an activity based conting system that would assign its manufacturing overhead to the following four activity cost pools Expected Activity Pathbreaker 75,000 xactive 35,000 250 2.500 Total Activites and Activity Measures Overhead Cost Supporting direct labor (direct labor-hours) Batch setups (setup) Product sustaining (number of products).... General factory (machine-hours). Total manufacturing overhead cost $ 797,500 680,000 650,000 72,500 $2,200,000 110,000 150 7,500 10,000 Determine the astivity rats for each of the four activity cost pools 3. Using the activity rates and cther data from the problem determine the unit prudust cost of cach product 4. Explain why the conventional and astivity-based cost assigaments differ