Problem 7-17 Comparing Traditional and Activity-Based Product Margins (LO7-1, LO7-3, LO7-4, LO7-5) Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: 1:36 Selling price per unit Direct materials per unit Direct laber per unit Direct labor-hours per unit Estimated annual production and sales Xtreme $ 138.00 $ 64.40 $ 13.50 1.5 DLHS 22,eee units Pathfinder $ 90.ee $ 51.00 $ 9.00 1.2 DLHS 73,eee units ces 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 $ 2,438,000 106,000 DLHS Sleev 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) Batch setups (setups) Product sustaining number of products) Other Total manufacturing overhead cost Estimated Overhead Cost 646,600 969,000 780,000 42,400 $ 2,438,000 Expected Activity Xtreme Pathfinder Total 33,000 73,000 106,000 330 240 570 1 1 NA NA NA 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