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Smoky Mountain Corporation makes two types of hiking boots-Xtreme and Pathfinder. Data concerning these two product lines appear below: The company has a traditional costing
Smoky Mountain Corporation makes two types of hiking boots-Xtreme and Pathfinder. Data concerning these two product lines appear below: 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: Required: 1. Using [ Exhibit 7-12 as a guide, compute the product margins for Xtreme and Pathfinder under the company's 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): Using Exhibit 7-10 as a guide, compute the product margins for Xtreme and Pathfinder under the activity-based costing system. 3. Using [ Exhibit 7-13 as a guide, prepare a quantitative comparison of the traditional and activity-based cost assignments. Explain why the traditional and activity-based cost assignments differ
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