Problem $7-23$ Comparing Traditional and Activity$-$Based Costing Product Margins $[$LO$1,$ LO$3,$ LO$4]$

Modern Tools makes two types of chain saws$-$High Grade and Professional. Data concerning these two product lines appear below:

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 nanufacturing overhead $$1,350,000$

Estimated total direct labour$-$houra $112,500$ DLHa

Required:

Compute the product margins for the High Grade and the Professional products under the company's traditional costing system.

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$)$:

Compute the product margins for the High Grade and Professional products under the ABC system. $($Round your intermediate

calculations to $2$ decimal places.$)$