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

XtremePathfinderSelling price per unit$120.00$87.00Direct materials per unit$63.60$55.00Direct labor per unit$12.00$10.00Direct labor-hours per unit1.2DLHs1.0DLHsEstimated annual production and sales25,000units72,000units

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$2,040,000Estimated total direct labor-hours102,000DLHs

Required:

1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system.(Do not round your intermediate calculations.)

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):

.

EstimatedActivityActivities and Activity MeasuresOverhead CostXtremePathfinderTotalSupporting direct labor (direct labor-hours)$622,20030,00072,000102,000Batch setups (setups)644,000250210460Product sustaining (number of products)700,000112Other73,800NANANATotal manufacturing overhead cost$2,040,000

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

3. Show a quantitative comparison of the traditional and activity-based cost assignments.(Do not round intermediate calculations. Round your "Percentage" answer to 1 decimal place