Smoky Mountain Corporation makes two types of hiking bootsthe Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder Selling price per unit $ 115.00 $ 85.00 Direct materials per unit $ 65.40 $ 53.00 Direct labor per unit $ 16.00 $ 10.00 Direct labor-hours per unit 1.6 DLHs 1.0 DLHs Estimated annual production and sales 32,000 units 60,000 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 $ 1,779,200 Estimated total direct labor-hours 111,200 DLHs Required: 1. Compute the product margins for the Xtreme and the Pathfinder products under the companys 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): Estimated Overhead Cost Expected Activity Activities and Activity Measures Xtreme Pathfinder Total Supporting direct labor (direct labor-hours) $ 556,000 51,200 60,000 111,200 Batch setups (setups) 770,000 430 340 770 Product sustaining (number of products) 400,000 1 1 2 Other 53,200 NA NA NA Total manufacturing overhead cost $ 1,779,200 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.