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	$	121.00		$	85.00
Direct materials per unit	$	64.90		$	51.00
Direct labor per unit	$	11.20		$	8.00
Direct labor-hours per unit		1.4	DLHs		1.0	DLHs
Estimated annual production and sales		27,000	units		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	$2,156,000
Estimated total direct labor-hours	107,800 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		Expected Activity
Activities and Activity Measures	Overhead Cost		Xtreme	Pathfinder	Total
Supporting direct labor (direct labor-hours)	$	700,700	37,800	70,000	107,800
Batch setups (setups)		737,000	380	290	670
Product sustaining (number of products)		640,000	1	1	2
Other		78,300	NA	NA	NA
Total manufacturing overhead cost	$	2,156,000

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.)

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))

Smoky Mountain Corporation makes two types of hiking boots-Xtreme and the Pathfinder. Data concerning these two product lines 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 $121.00 $64.90 $ 11.20 Pathfinder S 85.00 $ 51.00 $ 8.00 1.4 DLHs 27,000 units 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 $2,156,000 107,800 DLHs Required 1. Compute the product margins for the Xtreme and the Pathfinder products under the company's 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 Overhead Cost Activities and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups) Product sustaining (number of products) Other Xtreme Pathfinder Total $ 700,700 37,800 70,000 107,800 670 737,000 640,000 78,300 380 290 NA NA NA Total manufacturing overhead cost $ 2,156,000 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