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	$	140.00		$	99.00
Direct materials per unit	$	72.00		$	53.00
Direct labor per unit	$	24.00		$	12.00
Direct labor-hours per unit		2.0	DLHs		1.0	DLHs
Estimated annual production and sales		20,000	units		80,000	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

$1,980,000

Estimated total direct labor-hours

120,000 DLHs

Required:

1.

Compute the product margins for the Xtreme and the Pathfinder products under the companys traditional costing system. (Round your intermediate calculations to 2 decimal places.)

	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)	$	783,600	40,000	80,000	120,000
Batch setups (setups)		495,000	200	100	300
Product sustaining (number of products)		602,400	1	1	2
Other		99,000	NA	NA	NA
Total manufacturing overhead cost	$	1,980,000

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.)

	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