Smoky Mountain Corporation makes two types of hikingboots—Xtreme and the Pathfinder. Data concerning these two productlines appear below:

	Xtreme			Pathfinder
Selling price per unit	$	140.00			$	99.00
Direct materials per unit	$	72.00			$	53.00
Direct labor per unit	$	24.00			$	12.00
Direct labor-hours per unit		2.0	DLHs			1.0	DLHs
Estimated annual production and sales		20,000	units			80,000	units

The company has a traditional costing system in whichmanufacturing overhead is applied to units based on directlabor-hours. Data concerning manufacturing overhead and directlabor-hours for the upcoming year appear below:

Estimated total manufacturing overhead	$	1,980,000
Estimated total direct labor-hours		120,000		DLHs

Required:

1. Compute the product margins for the Xtreme and the Pathfinderproducts under the company’s traditional costing system.(Round your intermediate calculations to 2 decimalplaces.)

  

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				Activity
Activities and Activity Measures	Overhead Cost					Xtreme			Pathfinder			Total
Supporting direct labor (direct labor-hours)	$	783,600				40,000			80,000			120,000
Batch setups (setups)		495,000				200			100			300
Product sustaining (number of products)		602,400				1			1			2
Other		99,000				NA			NA			NA
Total manufacturing overhead cost	$	1,980,000

Compute the product margins for the Xtreme and the Pathfinderproducts under the activity-based costing system. (Negativeproduct margins should be indicated with a minus sign. Round yourintermediate calculations to 2 decimal places.)

3. Prepare a quantitative comparison of the traditional andactivity-based cost assignments. (Do not round intermediatecalculations. Round your "Percentage" answers to 1 decimal place.(i.e. .1234 should be entered as 12.3))