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In: AccountingSmoky Mountain Corporation makes two types of hiking boots—theXtreme and the Pathfinder. Data concerning these...Smoky Mountain Corporation makes two types of hiking boots—theXtreme and the Pathfinder. Data concerning these two product linesappear below:XtremePathfinderSelling price per unit$128.00$90.00Direct materialsper unit$63.10$50.00Direct labor perunit$12.00$8.00Directlabor-hours per unit1.5DLHs1.0DLHsEstimated annualproduction and sales20,000units70,000unitsThe 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 totalmanufacturing overhead$2,100,000Estimated totaldirect labor-hours100,000DLHsRequired:1. Compute the product margins for the Xtreme and the Pathfinderproducts 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):EstimatedOverhead CostExpected ActivityActivities andActivity MeasuresXtremePathfinderTotalSupporting direct labor (direct labor-hours)$745,00030,00070,000100,000Batch setups(setups)612,000200160360Productsustaining (number of products)700,000112Other43,000NANANATotalmanufacturing overhead cost$2,100,000Compute the product margins for the Xtreme and the Pathfinderproducts under the activity-based costing system.3. Prepare a quantitative comparison of the traditional andactivity-based cost assignments.