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PrOBLEM 7-17 Comparing Traditional and Activity-Based Product Margins 55 LO7-1, 15 LO7-3, 15 LO7-4. Smoly...

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PrOBLEM 7-17 Comparing Traditional and Activity-Based Product Margins 55 LO7-1, 15 LO7-3, 15 LO7-4. Smoly Mountein Corporation makes two types of hiking boots-the Xtremt and the Pachfinder. Data concersing these tro product lines appear below: The company has a traditional corting system in which manufactaring overhead is applied to units based con direct labor hours. Data concerning manufacturing overbead and ditect laborbours for the upconing year appear below: Required: 1. Using [() Exhilit 7-13 as a guide, compute the product margins for the Xtreme and the Pathfinder prodocts under the company's traditional corting system. 2. The company is considering replacing its traditional costing system with an activitybased corting wntem that would ascign its manufacturing ovehead to the following four activity cort pooks (the Ober cort pool includes organitationsustaining costs and idle capacity costs): Using ( Exhibit 7-11 a a guide, compute the product margins for the Xrreme and the Pathfinder productr noder the activitybased costing system 3. Using GG Exhibit 7-14 as a guide, prepare a quastitative comporiton of the tradivonil and activity based cort attipameats. Expluin why the traditional and activity based cost asaignments differ

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