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	$	120.00		$	87.00
Direct materials per unit	$	65.20		$	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		30,000	units		65,000	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	$2,033,000
Estimated total direct labor-hours	107,000 DLHs

Required:

1.

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

	Xtreme	Pathfider	Total:
Product Margin

(Tried this already and the answer is not x: 26.6 and P: 19 )

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)	$	631,300	42,000	65,000	107,000
Batch setups (setups)		876,000	410	320	730
Product sustaining (number of products)		460,000	1	1	2
Other		65,700	NA	NA	NA
Total manufacturing overhead cost	$	2,033,000

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

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		%0f
	Amount	Total Amount	Amount	Total Amount	Amount
Activity-Based Coasting System
Direct Costs
Indirect Costs:
Total cost assigned to Product
Costs not assigned to Product
Total Cost: