PLEASE HELP THIS PROBLEM WAS DONE INCORRECTLY TWICE.

PRODUCT MARGIN FOR TRADITIONAL COSTING SYSTEM

XTREME 667,200

PATHFINDER 560,000

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

	Xtreme		Pathfinder
Selling price per unit	$ 132.00		$ 94.00
Direct materials per unit	$ 64.60		$ 53.00
Direct labor per unit	$ 9.60		$ 8.00
Direct labor-hours per unit	1.2	DLHs	1.0	DLHs
Estimated annual production and sales	24,000	units	70,000	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	$ 2,470,000
Estimated total direct labor-hours	98,800	DLHs

Required:

Compute the product margins for the Xtreme and the Pathfinder products under the companys traditional costing system.

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):

1. Activities and (Activity Measures)	Estimated Overhead Cost	Expected Activity
   		Xtreme	Pathfinder	Total
   Supporting direct labor (direct labor-hours)	$ 642,200	28,800	70,000	98,800
   Batch setups (setups)	915,000	350	260	610
   Product sustaining (number of products)	840,000	1	1	2
   Other	72,800	NA	NA	NA
   Total manufacturing overhead cost	$ 2,470,000

   Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.Prepare a quantitative comparison of the traditional and activity-based cost assignments.