$(2.)$

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

two product lines appear below:

The company has a traditional costing system that applies manufacturing owerhead to units based on direct labor.

hours. Data concerning manufacturing overthead and direct labor$-$hours for the upcoming year appear below:

Estimated total manufacturing overhead $$1,980,000$

Estimated total direct labor$-$hours $,120,000DLHs$

Required:

Using Exhlbit $7-12$ as a guide, compute the product margins for Xtrense and Pathinder 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$-$sastaining costs and idle capacity costs$)$:

Using $(5.$ Exhibit $7-10$ as a guide, compute the product margins for Xtreme and Pathfinder under the activity.

based costing system.

Using Exhibit $7-13$ as a guide, prepare a quantitative comparison of the traditional and activity$-$based cost

assignments. Explain wtyy the traditional and activity$-$based cost assignments differ.