7-16 (Algo) Comparing Traditional and Activity-Based Product Margins [LO7-1, L07-3, L07-4, L07-5] 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 Income Stat Sales Cost of goods sold Gross margin Selling and adeinistrative expenses Not operating loss $ 1,786,000 1,225,562 488,438 650,000 $ (160,562) Hi-Tek produced and sold 60,100 units of 8300 st a price of $20 per unit and 12,600 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 silocation base. Additional Information relating to the company's two product lines is shown below Direct saterials Direct labor Manufacturing overhead Cost of goods sold 1588 5 400,200 $ 162,100 $128,180 $42,400 Total $562,300 162,500 580,762 $1,225,562 The company has crested an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC Implementation team concluded that $50,000 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: Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost Manufacturing Overhead $285,422 9300 91,000 Activity 1500 62,300 Total 153,300 133,140 77 248 317 101,600 2 1 2 50,600 NA NA NA $ 588,762 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. Complete this question by entering your answers in the tabs below. 1 Required 2 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.) Product margin B000 7600 Total S Required t Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 12 Required 3 Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place and and other answers to the nearest whole dollar amounts.) Traditional Cost System Amount B300 56 of Amount T600 % of Total Amount Total cost assigned to products $ 0 S 0 $ Total cost Activity-Based Costing System Direct costs Indirect costs: Total cost assigned to products Costs not assigned to products: Total cost Amount B300 % of Total Amount Amount $ T600 % of Total Amount Total Amount < Required 2 Required 3 > $