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He Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts--the B300 and the T500. An absorption costing income statement for the most recent period is shown: Hi-Tek Manufacturing Incorporated Sales Income Statement Cost of goods sold $ 1,755,900 1,238, 391 Gross margin Selling and administrative expenses 517,589 630,000 Net operating loss $ (112,491) Hi-Tek produced and sold 60,400 units of B300 at a price of $21 per unit and 12,500 units of T500 at a price of $39 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company's two product lines is shown below: B300 T500 Total Direct materials $ 400, 100 $ 162,900 $ 563,000 Direct labor $ 120,700 $ 42,400 163, 100 Manufacturing overhead 512,291 Cost of goods sold $ 1,238, 391 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $52,000 and $109,000 of the company's advertising expenses could be directly traced to 8300 and T500, respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the company's manufacturing overhead to four activities as shown below. Manufacturing Activity Activity Cost Pool (and Activity Measure) Overhead B300 T500 Total Machining (machine-hours) $ 212,531 90,700 62,200 152,900 Setups (setup hours) 138, 160 74 240 314 Product-sustaining (number of products) 101,600 1 2 Other (organization-sustaining costs) 60,000 NA NA Total manufacturing overhead cost $ 512,291 Required: Compute the product margins for the 8300 and T500 under the company's traditional costing system 2. Compute the product margins for 8300 and T500 under the activity-based costing system 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. 1 NA Required 1 Required 2 Required 3 Compute the product margins for the B300 and T500 under the company's traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) B300 T500 Total Product margin $ Required Required 2 > Required 1 Required 2 Required 3 Compute the product margins for B300 and T500 under the activity-based costing system. (Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.) 3300 Product margin T500 Total SUU I DUV Total Amount % of Amount Amount Traditional Cost System $ 0 $ 0 Total cost assigned to products $ 0 $ 0 Total cost B300 T500 Total Amount % of Total Amount % of Total Amount Amount Amount Activity-Based Costing System Direct costs: Indirect costs $ 0 $ 0 Total cost assigned to products Costs not assigned to products: $ Total cost

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