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 Xtreme $ 121.00 Pathfinder $ 86.00 Direct materials per unit $ 65.30 $ 52.00 Direct labor per unit Direct labor-hours per unit Estimated annual production and sales $ 13.50 1.5 DLHS 31,000 units $ 9.00 1.0 DLHA 65,000 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 $ 2,230,000 111,500 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 $ 724,750 Estimated Overhead Cost Xtreme Expected Activity Pathfinder Total 46,500 65,000 111,500 975,000 470,000 420 330 750 1 1 2 60,250 NA NA NA $ 2,230,000 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. Complete this question by entering your answers in the tabs below.