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 $121.00 $ 88.00 Direct materials per unit $ 64.70 Direct labor per unit $ 10.80 $ $ 54.00 9.00 Direct labor-hours per unit Estimated annual production and sales 1.2 DLH 25,000 units 1.0 DLR 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 $ 2,020,000 Estimated total direct labor-hours 101,000 DL.H 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 $ 606,000 693,000 700,000 21,000 $2,020,000 Expected Activity Xtrene Pathfinder 30,000 71,000 360 Total 270 1 101,000 630 2 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.