Smoky Mountain Corporation makes two types of hiking boots—theXtreme and the Pathfinder. Data concerning these two product linesappear below: Xtreme Pathfinder Selling price per unit $ 121.00 $88.00 Direct materials per unit $ 64.70 $ 54.00 Direct labor perunit $ 10.80 $ 9.00 Direct labor-hours per unit 1.2 DLHs 1.0 DLHsEstimated annual production and sales 25,000 units 71,000 units Thecompany has a traditional costing system in which manufacturingoverhead is applied to units based on direct labor-hours. Dataconcerning manufacturing overhead and direct labor-hours for theupcoming year appear below: Estimated total manufacturing overhead$ 2,020,000 Estimated total direct labor-hours 101,000 DLHsRequired: 1. Compute the product margins for the Xtreme and thePathfinder products under the company’s traditional costing system.2. The company is considering replacing its traditional costingsystem with an activity-based costing system that would assign itsmanufacturing overhead to the following four activity cost pools(the Other cost pool includes organization-sustaining costs andidle capacity costs): Estimated Overhead Cost Expected ActivityActivities and Activity Measures Xtreme Pathfinder Total Supportingdirect labor (direct labor-hours) $ 606,000 30,000 71,000 101,000Batch setups (setups) 693,000 360 270 630 Product sustaining(number of products) 700,000 1 1 2 Other 21,000 NA NA NA Totalmanufacturing overhead cost $ 2,020,000 Compute the product marginsfor the Xtreme and the Pathfinder products under the activity-basedcosting system. 3. Prepare a quantitative comparison of thetraditional and activity-based cost assignments.