Smoky Mountain Corporation makes two types of hiking boots$-$Xtreme and Pathfinder. Data concerning these two product lines

appear below:

The company has a traditional costing system that applies manufacturing overhead 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

$$2,100,000$

Estimated total direct labor$-$hours

$100,000$ DLHs

Required:

Compute the product margins for Xtreme and Pathfinder under the company's traditional costing system.

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$)$:

Compute the product margins for Xtreme and Pathfinder under the activity$-$based costing system.

Prepare a quantitative comparison of the traditional and activity$-$based cost assignments.