Smoky Mountain Corporation makes two types of hiking bootsthe Xtreme and the Pathfinder. Data concerning these two product lines appear below:

Xtreme Pathfinder

Selling price per unit $ $

Direct materials per unit $ $

Direct labor per unit $ $

Direct laborhours per unit DLHs DLHs

Estimated annual production and sales units units

The company has a traditional costing system in which manufacturing overhead is applied to units based on direct laborhours. Data concerning manufacturing overhead and direct laborhours for the upcoming year appear below:

Estimated total manufacturing overhead $

Estimated total direct laborhours DLHs

Required:

Compute the product margins for the Xtreme and the Pathfinder products under the companys traditional costing system.

The company is considering replacing its traditional costing system with an activitybased costing system that would assign its manufacturing overhead to the following four activity cost pools the Other cost pool includes organizationsustaining costs and idle capacity costs:

Activities and Activity Measures Estimated Overhead Cost Expected Activity

Xtreme Pathfinder Total

Supporting direct labor direct laborhours $

Batch setups setups

Product sustaining number of products

Other NA NA NA

Total manufacturing overhead cost $

Compute the product margins for the Xtreme and the Pathfinder products under the activitybased costing system.

Prepare a quantitative comparison of the traditional and activitybased cost assignments.