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Problem 6-16 Comparing Traditional and Activity-Based Product Margins [LO6-1, LO6-3, LO6-4, LO6-5 Hi-Tek Manufacturing Inc makes two types of industrial component parts the B300 and the T500, An absorption costing income statement for the most recent period is shown below Hi-Tak Manufacturing Inc. Incomo Statement Sa os Cost of goods sold Gross margin Selling and administrativo expensos Nat operating loss $1,772,200 1,246,020 527,180 620,000 H-Tek produced and sold 60,200 units of B300 at a price of $21 per unit and 12,700 units of T500 at a price of $40 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the alocation base. Additional information relating to the company's two product lines is shown below: T500 $ 400,300 S 162500 563,400 B300 Total Direcl materials Direct labor $ 120,300 S 42,500 162,800 Cost of goods sold The company has created an acti i y-based costing system to evaluate the profi ablity of its products. H Tek's ABC m plementation eam concluded that 53 000 and $108,000 o the company's advertising expenses oould be dire y raced o B300 and T500, respectively. The remainder of the sel ing and administrative expenses was organizaton-sustaining in nature. The ABC team a so distributed the company's manufacturing overhead to four activities as shown below Manufacturing Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) 8300 T500 S 213,920 43,100 101,800 60,200 518,820 0,200 62,80D 152,800 240 78 g (numbar of products) Other (organization-sustaining costs) Total manufacturing overhead cost NA NA NA 1. Compute the product margins for the B300 and T500 under the company's traditional costing system. (Do not round your overhead rate. Round your other intermediate and final answers to the nearest whole number.) B300 Product margin S 732.180 ,048.380 1,780,560

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