Smoky Mountain Corporation makes two types of hiking boots—Xtreme and the Pathfinder. Data concerning these two product lines appear below:

Xtreme Pathfinder
Selling price per unit $ 115.00 $ 85.00
Direct materials per unit $ 65.40 $ 53.00
Direct labor per unit $ 16.00 $ 10.00
Direct labor-hours per unit 1.6 DLHs 1.0 DLHs
Estimated annual production and sales 32,000 units 60,000 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 $1,779,200
Estimated total direct labor-hours 111,200 DLHs

Required:

1.
Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system. (Do not round your intermediate calculations.)

2.
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):

Estimated
Expected Activity

Activities and Activity Measures Overhead Cost Xtreme Pathfinder Total
Supporting direct labor (direct labor-hours) $ 556,000 51,200 60,000 111,200
Batch setups (setups) 770,000 430 340 770
Product sustaining (number of products) 400,000 1 1 2
Other 53,200 NA NA NA
Total manufacturing overhead cost $ 1,779,200

Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Negative product margins should be indicated with a minus sign. Round your intermediate calculations to 2 decimal places.)

3.
Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Do not round intermediate calculations. Round your "Percentage" answer to 1 decimal place. (i. e. .1234 should be entered as 12.3))