Smoky Mountain Corporation makes two types of hiking bootsXtreme 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	$	63.90		$	51.00
Direct labor per unit	$	12.00		$	10.00
Direct labor-hours per unit		1.2	DLHs		1.0	DLHs
Estimated annual production and sales		28,000	units		75,000	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	$2,063,400
Estimated total direct labor-hours	108,600 DLHs

Required:

1.

Compute the product margins for the Xtreme and the Pathfinder products under the companys traditional costing system.

	Xtreme	Pathfinder	Total
Product margin

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		Expected Activity
Activities and Activity Measures	Overhead Cost		Xtreme	Pathfinder	Total
Supporting direct labor (direct labor-hours)	$	673,320	33,600	75,000	108,600
Batch setups (setups)		520,000	280	240	520
Product sustaining (number of products)		790,000	1	1	2
Other		80,080	NA	NA	NA
Total manufacturing overhead cost	$	2,063,400

Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Negative customer margins should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places.)

	Xtreme	Pathfinder	Total
Product margin

3.	Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Do not round intermediate calculations. Round your "Percentage" answer to 1 decimal place. (i.e. .1234 should be entered as 12.3))

	Xtreme		Pathfinder		Total
		% of		% of
	Amount	Total Amount	Amount	Total Amount	Amount
Traditional Cost System
Total cost assigned to products

	Xtreme		Pathfinder		Total
		% of		% of
	Amount	Total Amount	Amount	Total Amount	Amount
Activity-Based Costing System
Direct costs:
Indirect costs:
Total cost assigned to products
Costs not assigned to products:
Total cost