Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below. Selling price per unit Direct materials per unit Direct labor-hours per unit Direct labor per unit Estimated annual production and sales Xtreme Pathfinder $115.00 $65.50 $ 84.00 $ 54.00 $ 8.00 $ 13.60 1.7 DLHS 33,000 units 1.0 DLHS 61,000 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 $ 1,756,500 117,100 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 Estinated Overhead Cost $ 526,950 790,000 440 Expected Activity Xtreme Pathfinder. 56,100 61,000 350 Total 117,100 790 1 1 2 39,550 NA NAT NA 400,000