Problem $5-17($Algo$)$ Comparing Traditional and Activity$-$Based Product Margins $[$LO$5-1,$ LO$5-3,$ LO$5-4,$ LO$5-5]$Smoky Mountain Corporation makes two types of hiking bootsthe Xtreme and the Pathfinder. Data concerning these two product lines appear below: XtremePathfinderSelling price per unit$ $125\mathrm{.}00$ $ $91\mathrm{.}00$ Direct materials per unit$ $64\mathrm{.}20$ $ $55\mathrm{.}00$ Direct labor per unit$ $16\mathrm{.}00$ $ $10\mathrm{.}00$ Direct labor$-$hours per unit$1\mathrm{.}6$DLHs$1\mathrm{.}0$DLHsEstimated annual production and sales$25,000$units$71,000$unitsThe 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$ $2,331,000$ Estimated total direct labor$-$hours$111,000$DLHsRequired:Compute the product margins for the Xtreme and the Pathfinder products under the companys 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$)$:Activities and $($Activity Measures$)$Estimated Overhead CostExpected ActivityXtremePathfinderTotalSupporting direct labor $($direct labor$-$hours$)$$ $888,00040,00071,000111,000$Batch setups $($setups$)583,000310220530$Product sustaining $($number of products$)780,000112$Other$80,000$NANANATotal manufacturing overhead cost$ $2,331,000$ 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.