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 Pathfinder Direct materials per unit $121.00 $ 64.70 $ 88.00 $ 54.00 Direct labor per unit Direct labor-hours per unit Estimated annual production and sales $ 10.80 1.2 DLH 25,000 units $ 9.00 1.0 DLH 71,000 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 Required: $2,020,000 101,000 DLH 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 Expected Activity Overhead Cost Xtreme Pathfinder 30,000 Estimated $ 606,000 693,000 Total 360 1 71,000 270 101,000 21,000 NA 1 NA 630 2 NA $ 2,020,000 700,000