Smoky Mountain Corporation makes two types of hiking bootsXtreme and Pathfinder. Data concerning these two product lines appear below:

	Xtreme	Pathfinder
Selling price per unit	$ 121.00		$ 86.00
Direct materials per unit	$ 65.30		$ 52.00
Direct labor per unit	$ 13.50		$ 9.00
Direct labor-hours per unit	1.5	DLHs	1.0	DLH
Estimated annual production and sales	31,000	units	65,000	units

The company has a traditional costing system that applies manufacturing overhead 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	$ 2,230,000
Estimated total direct labor-hours	111,500	DLHs

Required:

1. Compute the product margins for Xtreme and Pathfinder 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):

Activities and (Activity Measures)	Estimated Overhead Cost	Expected Activity
Xtreme	Pathfinder	Total
Supporting direct labor (direct labor-hours)	$ 724,750	46,500	65,000	111,500
Batch setups (setups)	975,000	420	330	750
Product sustaining (number of products)	470,000	1	1	2
Other	60,250	NA	NA	NA
Total manufacturing overhead cost	$ 2,230,000

Compute the product margins for Xtreme and Pathfinder under the activity-based costing system.

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.

Prepare a quantitative comparison of the traditional and activity-based cost assignments.

Note: Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place.

	Xtreme	Pathfinder	Total Amount
	% of		% of
Amount	Total Amount	Amount	Total Amount
Traditional Cost System
Total cost assigned to products	$0		$0		$0
	Xtreme	Pathfinder	Total Amount
	% of		% of
Amount	Total Amount	Amount	Total Amount
Activity-Based Costing System
Direct costs:
Indirect costs:
Total cost assigned to products	$0		$0		$0
Costs not assigned to products:
Total cost					$0