Smoky Mountain Corporation makes two types of hiking boots--the Xtreme and the Pathfinder. Data concerning these two product ines appear below: Selling price per unit Direct materials per unit Xtreme $116.00 Pathfinder $ 80.00 $ 64.00 $ $ 52.00 12.00 Direct labor per unit Direct labor-hours per unit Estimated annual production and sales 1.5 DLHS 29,000 units $ 8.00 1.0 DLHS 76,000 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 Estimated total direct labor-hours $1,912,000 119,500 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): Activities and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost $ 693,100 539,000 640,000 Estimated Overhead Cost Xtreme Expected Activity Pathfinder. Total 43,500 76,000 119,500 290 200 490 1 1 2 39,900 NA NA NA $ 1,912,000 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.