1 Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts-the B300 and the T500. An absorption costin- income statement for the most recent period is shown: Hi-Tek Manufacturing Incorporated nts Income Statement Sales Cost of goods sold Gross margin eBook Selling and administrative expenses Hint Print ferences Net operating loss $ 1,704,000 1,248,944 455,056 650,000 $ (194,944) Hi-Tek produced and sold 60,200 units of 8300 at a price of $20 per unit and 12,500 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 allocation base. Additional information relating to the company's two product lines is shown below: Direct materials Direct labor Manufacturing overhead Cost of goods sold B300 $ 400,200 5 121,000 7500 $162,900 $ 42,800 Total $ 563,100 163,800 522,044 $1,248,944 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 $106,000 of the company's 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 company's manufacturing overhead to four activities as shown below: Hint Print References Activity Coat Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Manufacturing Overhead $ 207,944 152,100 101,400 Total manufacturing overhead cost Activity B300 90,100 T500 62,000 78 260 Total 152,900 338 1 1 2 60,600 NA NA NA $ 522,044 Required: 1. Compute the product margins for the B300 and T500 under the company's traditional costing system. 2. Compute the product margins for B300 and T500 under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments