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 $126.00 $ 63.20 $ 91.00 $ 51.00 Direct labor per unit $ 11.70 $ Direct labor-hours per unit Estimated annual production and sales 1.3 DLHS 21,000 units 9.00 1.0 DLHS 75,000 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 $2,250,600 102,300 DLMs 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 Estimated Expected Activity Supporting direct labor (direct labor-hours) Batch setups (setups) $ 767,250 Overhead Cost Xtreme Pathfinder 27,300 75,000 Total 102,300 722,000 Product sustaining (number of products) 670,000 210 1 170 380 1 Other Total manufacturing overhead cost 91,350 $2,250,600 NA NA NA 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.