Problem 7-17 (Algo) Comparing Traditional and Activity-Based Product Margins (L07-1, LO7-3, L07-4, LO7-5) Smoky Mountain Corporation makes two types of hiking boots--the Xtreme and the Pathfinder Data concerning these two product lines appear below: Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Xtreme $121.00 $ 63.70 $ 8.80 1.1 DLS 26,000 units Pathfinder $ 91.00 $56.00 $ 8.00 1.0 DHS 73,000 unita 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 Estimated total direct labor-hours $2,133,600 101,600 DL Required: 1. Compute the product margins for the Xtreme and the Pathfinder 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) Activities and Activity Measures Supporting direct labor (direct labor-hours) Bateh setups (setups) Product sustaining number of products) Other Total manufacturing overhead coat Estimated Expected Activity Overhead cout Xtreme Pathfinder Total 629,920 28,600 73,000 101,600 768,000 260 220 480 710.000 1 1 2 25.680 NA NA NA $2,133,600 Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whle dollar amount.) Xtreme Pathfinder Total Product margin $ Required 2 > Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. Complete this question by entering your answers in the tabs below. Required 1 Required Required 3 Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Round your intermediate calculations to 2 decimal places.) Xtreme Pathfinder Product margin Total
