Smoky Mountain Corporation makes two types of hiking boots$-$Xtreme and 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

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

$$2,438,6019$

Estimated total direct labor$-$hours

$106,090$ DLHs

Requlred:

Compute the product margins for Xtreme and Paithinder 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$)$:

$\backslash$table$[[$Activities and $($Activity Measures$),$Estimated,Expected Activity$],[$Qwerlinead cost$,$Xtreme,Pathfinder,rotal$],[$Supporting direct labor $($d$$rect labor$-$hours$),$$$646,60,33.969,73,o+,106,000],[$Batch setups $($setups$),96916,330,249,576],[$Product sustaining $($number of products$),780,000,1,1,2],[\backslash$table$[[$Other$],[$Total manufacturing overhead cost$]],42,46,$NA$,$NA$,$NA$],[$Total manufacturing overhead cost,$$2,438,699,,,]]$

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

$3.$ Prepare a quantitative comparison of the traditional and activity$-$based cost assignments.

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