questions 1,2 and 3

PROBLEM 7-17 Comparing Traditional and Activity-Based Product Margins 107-1107-3, L07-4, EL07-5 Smoky Mountain Corporation makes two types of hiling boots-the Xtreme and the Puthfinder. Dute concerning these two product lines appear below Xtreme Pathfinder $140.00 Selling price per unit Direct materials per unit $99.00 $72.00 $53.00 $24.00 $12.00 Direct labor per unit Direct labor hours per unit 20 DLHS LO DLHS Estimated annual production and sales 20,000 units 80,000 units 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 $1,980,000 Estimated total direct labor hours 120,000 DLHS Required: 1. Using Exhibit 7-13 as a guide, compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system 2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign ito manufacturing overhead to the following four activity cost pools (the Other cost pool included organization custaining costs and idle capacity costs) Expected Activity Estimated Overhead Cost Xtreme Puthfinder Total $ 783 600 40,000 80.000 120,000 200 100 300 Activities and Activity Meatures) Supporting direct labor (direct labor boun) Batch setups (setups Product sustaining (number of products) Other Total manufacturing overhead cost 1 1 2 195.000 602.400 99.000 $1.980.000 NA NA NA Using Exhibit 7-11 as a guide compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system 3. Using Exhibit 7-14 ssguide, prepare a quantitative comparison of the traditional and activity-based cost assignments Explaint the traditional and activity based cost apaments differ