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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

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

Xtreme Pathfinder
Selling price per unit $ 115.00 $ 85.00
Direct materials per unit $ 65.40 $ 53.00
Direct labor per unit $ 16.00 $ 10.00
Direct labor-hours per unit 1.6 DLHs 1.0 DLHs
Estimated annual production and sales 32,000 units 60,000 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 $ 1,779,200
Estimated total direct labor-hours 111,200 DLHs

Required:

1. Compute the product margins for the Xtreme and the Pathfinder products under the companys 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):

Estimated Overhead Cost Expected Activity
Activities and Activity Measures Xtreme Pathfinder Total
Supporting direct labor (direct labor-hours) $ 556,000 51,200 60,000 111,200
Batch setups (setups) 770,000 430 340 770
Product sustaining (number of products) 400,000 1 1 2
Other 53,200 NA NA NA
Total manufacturing overhead cost $ 1,779,200

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.

Required 1 Required 2 Required 3 Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) Xtreme Pathfinder Total Product margin Required 1 Required 2 Required 3 Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Round your intermediate calculations to 2 decimal places.) Xtreme Pathfinder Total Product margin

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