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 $ 120.00 Pathfinder $87.00 Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales $ 65.20 $ 11.20 1.4 DLHS 30,000 units $ 51.00 $ 8.00 1.0 DLHS 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 Required: $ 2,033,000 107,000 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 Estinated Overhead Cost $631,300 Expected Activity Xtreme Pathfinder 42,000 65,000 Total 107,000 876,000 460,000 410 320 730 1 1 2 65,700 NA NA NA $ 2,033,000 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.