Mountain Shoe Corporation makes two types of hiking bootsthe Rugged and the Comfort. Data concerning these two product lines appear below: Rugged Comfort Selling price per unit $140.00 $99.00 Direct materials per unit $72.00 $53.00 Direct labor per unit $24.00 $12.00 Direct labor-hours per unit 2.0 hours 1.0 hours Estimated annual production and sales 20.000 units 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 Estimated total direct labor-hours 120,000 hours Required: 1. Compute the product margins for the Rugged and the Comfort 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): Expected Activity Rugged Comfort Total 40,000 80,000 120,000 Estimated Overhead Activities and Activity Measures) Cost Supporting direct labor (direct labor-hours) $ 783,600 Batch setups (setups) 495,000 Product Designs (number of Designs) 602.400 Other 99,000 200 100 300 3 5 8 NA NA NA Total manufacturing overhead cost $1,980,000 3. Compute the product margins for the Rugged and the Comfort products under the activity-based costing system. 4. Explain why the traditional and activity-based cost assignments differ. What recommendation would you offer to management about pricing its products