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Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning...

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Accounting

Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product
lines appear below:
The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data
concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:
Estimated total manufacturing overhead
Estimated total direct labor-hours
$1,980,000
120,000 DLHs
Required:
Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system.
The company is considering replacing its traditional costing system with an activity-based costing system that would assign its
manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle
capacity costs):
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.
Prepare a quantitative comparison of the traditional and activity-based cost assignments.
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