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 $ $121\mathrm{.}00$ $ $85\mathrm{.}00$

Direct materials per unit $ $64\mathrm{.}90$ $ $51\mathrm{.}00$

Direct labor per unit $ $11\mathrm{.}20$ $ $8\mathrm{.}00$

Direct labor$-$hours per unit $1\mathrm{.}4$ DLHs $1\mathrm{.}0$ DLHs

Estimated annual production and sales $27,000$ units $70,000$ units

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 $ $2,156,000$

Estimated total direct labor$-$hours $107,800$ DLHs

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$)$:

$3.$

Activities and $($Activity Measures$)$ Estimated Overhead Cost Expected Activity

Xtreme Pathfinder Total

Supporting direct labor $($direct labor$-$hours$)$ $ $700,70037,80070,000107,800$

Batch setups $($setups$)737,000380290670$

Product sustaining $($number of products$)640,000112$

Other $78,300$ NA NA NA

Total manufacturing overhead cost $ $2,156,000$

$4.$ Compute the product margins for the Xtreme and the Pathfinder products under the activity$-$based costing system.

$5.$ Prepare a quantitative comparison of the traditional and activity$-$based cost assignments.Required $1$

Required $3$

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

Note: Round your intermediate calculations to $2$ decimal places and "Percentage" answers to $1$ decimal place.

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