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Precision Manufacturing Inc. (PMI) makes two types of industrial component partsthe EX300 and the TX500. An absorption costing income statement for the most recent period is shown below:

Precision Manufacturing Inc. Income Statement
Sales	$	1,633,300
Cost of goods sold		1,225,370
Gross margin		407,930
Selling and administrative expenses		550,000
Net operating loss	$	(142,070)

PMI produced and sold 60,100 units of EX300 at a price of $19 per unit and 12,600 units of TX500 at a price of $39 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:

	EX300		TX500		Total
Direct materials	$	400,600	$	162,300	$	562,900
Direct labor	$	120,600	$	42,400		163,000
Manufacturing overhead						499,470
Cost of goods sold					$	1,225,370

The company has created an activity-based costing system to evaluate the profitability of its products. PMIs ABC implementation team concluded that $59,000 and $106,000 of the companys advertising expenses could be directly traced to EX300 and TX500, 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		EX300	TX500	Total
Machining (machine-hours)	$	209,610	90,100	62,900	153,000
Setups (setup hours)		127,160	79	210	289
Product-sustaining (number of products)		101,800	1	1	2
Other (organization-sustaining costs)		60,900	NA	NA	NA
Total manufacturing overhead cost	$	499,470

Required

1.	Compute the product margins for the EX300 and TX500 under the companys traditional costing system. (Loss amounts should be indicated with a minus sign. Do not round intermediate calculations. Round your final answers to the nearest dollar amount. Omit the "$" sign in your response.)

	EX300	TX500	Total
Product margin	$	$	$

2.	Compute the product margins for EX300 and TX500 under the activity-based costing system. (Loss amounts should be indicated with a minus sign. Do not round intermediate calculations. Round your final answers to the nearest dollar amount. Omit the "$" sign in your response.)

	EX300	TX500	Total
Product margin	$	$	$

3.	Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your percentage answers to one decimal place and other answers to the nearest dollar amount. Omit the "$" & "%" signs in your response.)

	EX300		TX500		Total
	Amount	% of Total Amount	Amount	% of Total Amount	Amount
Traditional Cost System
(Click to select)Direct materialsOtherSelling and administrativeMachiningAdvertising expenseProduct sustaining	$	%	$	%	$
(Click to select)Advertising expenseDirect laborSelling and administrativeMachiningOtherProduct sustaining		%		%
(Click to select)Advertising expenseMachiningOtherProduct sustainingManufacturing overheadSelling and administrative		%		%
Total cost assigned to products	$		$
(Click to select)Direct laborMachiningManufacturing overheadSelling and administrativeOtherDirect materials
Total cost					$
Activity-Based Costing System
Direct costs:
(Click to select)OtherSelling and administrativeDirect materialsSetupsProduct sustainingManufacturing overhead	$	%	$	%	$
(Click to select)Direct laborSetupsMachiningManufacturing overheadSelling and administrativeOther		%		%
(Click to select)Advertising expenseManufacturing overheadMachiningProduct sustainingOtherSetups		%		%
Indirect costs:
(Click to select)MachiningDirect laborManufacturing overheadDirect materialsSelling and administrativeAdvertising expense		%		%
(Click to select)Manufacturing overheadSelling and administrativeSetupsDirect laborOtherDirect materials		%		%
(Click to select)Advertising expenseProduct sustainingManufacturing overheadDirect materialsDirect laborOther		%		%
Total cost assigned to products	$		$
Costs not assigned to products:
(Click to select)Advertising expenseProduct sustainingMachiningSetupsSelling and administrativeManufacturing overhead
(Click to select)Manufacturing overheadSetupsDirect materialsDirect laborOtherProduct sustaining
Total cost					$

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