Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product ines appear below: Selling price per unit Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production and sales Xtreme $ 132.00 $ 64.60 $ 9.60 1.2 DLHS 24,000 units Pathfinder $ 94.00 $ 53.00 $ 8.00 1.0 DLHS 70,000 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 $ 2,470,000 98,800 DLHS 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 $ 642,200 915,000 840,000 72,800 $ 2,470,000 Expected Activity Xtreme Pathfinder Total 28,800 70,000 98,800 350 260 610 1 1 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 comnarison of the traditional and activity.hacod con Pathfinder Total Xtreme % of % of Amount Total Amount Amount Amount Total Amount Traditional Cost System % 790,400 $ $ % Direct labor % % 5,260,400 Direct materials $ 230,400 1,550,400 720,000 $ 2,500,800 560,000 3,710,000 1,750,000 6,020,000 % % Manufacturing overhead Total cost assigned to products 2,470,000 8,520,800 $ $ Xtreme Pathfinder Total % of % of Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs: Direct labor $ 230,400 % $ 560,000 % Direct materials 1,550,400 % 3,710,000 % Indirect costs: Batch setups 525,000 % 390,000 % Product sustaining 420,000 % 420,000 % Supporting direct labor 187,200 % 455,000 % Total cost assigned to products $ 2,913,000 $ 5,535,000 $ 0 Costs not assigned to products: Other 72,800 Total cost $ 72,800