Problem 2: Rocky Mountain Corporation makes two types of hiking boots-Xactive and Pathbreaker. Data concerning these two product lines appear below: Xactive Pathbreaker Selling price per unit Direct materials per unit Direct labour per unit... Direct labour-hours per unit. Estimated annual production and sales. $12700 $64.80 $18.20 14 DLHS 25,000 units $89.00 $5100 $13.00 10 DLHS 75.000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labour hours. Data concerning manufacturing overhead and direct labour-hours for the upcoming year appear below: Estimated total manufacturing overhead. Estimated total direct labour-hours. $2,200,000 110.000 DLHS a. Compute the product margins for Xactive and Pathbreaker products under the company's traditional costing system. b. The company is considering replacing its traditional costing system with an ABC 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): Cost Pools and Activity Measures Supporting dired labou (dired labour hours)....... Estimated Overhead Cost $ 797.500 fon Expected Activity Xactive Pathbreaker Total 35.000 75.000 10000 m direct labour-hours for the upcoming year appear below: Estimated total manufacturing overhead. Estimated total direct labour-hours. $2,200,000 110,000 DLHS a. Compute the product margins for Xactive and Pathbreaker products Inder the company's traditional costing system. b. The company is considering replacing its traditional costing system with an ABC 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): Total Cost Pools and Activity Measures Supporting direct labour (direct labour hours) Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost Estimated Overhead Cost $ 797,500 680.000 650,000 72500 $2.200.000 Expected Activity Xactive Pathbreaker 35,000 75.000 250 150 1 NA NA 110.000 400 2 NA 1 Compute the product margins for Xactive and Pathbreaker products under the ABC system