| Hi-Tek produced and sold 60,300 units of B300 at a price of $21 per unit and 12,600 units of T500 at a price of $40 per unit. The companys 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 companys two product lines is shown below: | | B300 | T500 | Total | | Direct materials | $ | 400,600 | $ | 162,600 | $ | 563,200 | | Direct labor | $ | 121,000 | $ | 42,600 | | 163,600 | | Manufacturing overhead | | | | | | 514,981 | | | | | | | | | | Cost of goods sold | | | | | $ | 1,241,781 | | | | | | | | | | | The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Teks ABC implementation team concluded that $51,000 and $106,000 of the companys advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the companys manufacturing overhead to four activities as shown below: | | Manufacturing | Activity | | Activity Cost Pool (and Activity Measure) | Overhead | B300 | T500 | Total | | Machining (machine-hours) | $ | 210,021 | 90,400 | 62,900 | 153,300 | | Setups (setup hours) | | 142,760 | 72 | 260 | 332 | | Product-sustaining (number of products) | | 101,200 | 1 | 1 | 2 | | Other (organization-sustaining costs) | | 61,000 | NA | NA | NA | | | | | | | | | Total manufacturing overhead cost | $ | 514,981 | | | | | | | | | | | | | | 1. | Compute the product margins for the B300 and T500 under the companys traditional costing system.(Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollars.) | | | | | | B300 | T500 | Total | | Product margin | | | | | | | | | 2. | 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.) | | | | | | | | | B300 | T500 | Total | | Product margin | | | | | | | 3. | Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answer to 1 decimal place. (i.e. .1234 should be entered as 12.3) and other answers to nearest whole dollar amounts.) | | | | | | | | | B300 | T500 | Total | | | | % of | | % of | | | | Amount | Total Amount | Amount | Total Amount | Amount | | Traditional Cost System | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total cost assigned to products | | | | | | | | | | | | | | Total cost | | | | | | | | | | | | | | B300 | T500 | Total | | | | % of | | % of | | | | Amount | Total Amount | Amount | Total Amount | Amount | | Activity-Based Costing System | | | | | | | Direct costs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Indirect costs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total cost assigned to products | | | | | | | Costs not assigned to products: | | | | | | | | | | | | | | | | | | | | | Total cost | | | | | | | | |
