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CoursHeroTranscribedText: Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Xtreme Pathfinder Selling price per unit S 115.00 S 85.00 Direct materials per unit S 63.90 S 51.00 Direct labor per unit S 12.00 S 10.00 Direct labor-hours per unit 1.2 DLHs 10 DLHS Estimated annual production and sales 28,000 units 75,000 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 2,063,400 Estimated total direct labor-hours 108,600 DLHS Required: 1. Compute the product margins for the Xtreme and the Pathfinder products 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): Estimated Expected Activity Overhead Cost Activities and Activity Measures Xtreme Pathfinder Total Supporting direct labor (direct labor-hours) 673,320 33,600 75,000 108,600 Batch setups (setups) 520,000 280 240 520 Product sustaining (number of products) 790,000 1 1 2 Other 80,080 NA NA NA Total manufacturing overhead cost 2,063,400

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