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 $ 123.00 $86.00 Direct materials per unit $ 63.80 $ 50.00 Direct labor perunit $ 10.80 $ 9.00 Direct labor-hours per unit 1.2 DLHs 1.0 DLHsEstimated annual production and sales 27,000 units 74,000 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$ 2,340,800 Estimated total direct labor-hours 106,400 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) $ 691,600 32,400 74,000 106,400Batch setups (setups) 900,000 270 230 500 Product sustaining(number of products) 700,000 1 1 2 Other 49,200 NA NA NA Totalmanufacturing overhead cost $ 2,340,800 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.