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 Xtreme Pathfinder $116.00 $ 80.00 $ 64.00 $ 52.00 Estimated annual production and sales $ 12.00 1.5 DLHS 29,000 units $ 8.00 Direct labor per unit Direct labor-hours per unit 1.0 DL 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 DL 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 Estimated Overhead Cost $ 693,100 539,000 640,000 39,900 $ 1,912,000 Expected Activity Xtreme Pathfinder 43,500 76,000 Total 290 1 NA 200 1 NA 119,500 490 2 NA