PROBLEM 7-17 Comparing Traditional and Activity-Based Product Margins L07-1, L07-3, L07-4. L07-5 Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder 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 DLH: 1.0 DLH: Estimated annual production and sales 20,000 units 90,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor hours. Deta concerning manufacturing overhead and direct labor hours for the upcoming year appear below: Estimated total manufacturing overhead $1,980,000 Estimated total direct laborhours 120,000 DLH: Required: 1. Using @ Exhibit 7-13 as a guide, 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 poot includes organization-sustaining costs and adie capacity costs): 1 Estimated Expected Activity Activities and Activity Measures) Overhead Cost Xtreme Pathfinder Total Supporting direct labor (direct labor-hours) $ 783,600 40,000 30,000 120,000 Batch setaps (setupe) 495,000 200 100 300 Product sustaining (number of products) 602,400 1 2 Other 99,000 NA Total manufacturing overhead cost $1,980,000 Using Exhibit 7-11 as a guide, compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system 3. Using Exhibit 7-14 23 a guide, prepare a quantitative comparison of the traditional and activity-based cost assignments. Explain why the traditional and activity-based cost assignments diffes. NA