Che Hi-Tek Manufacturing, Inc., makes two types of Industrial component parts--the 8300 and the T500. An absorption costing income statement for the most recent period is shown: HI-Tek Manufacturing Inc. Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss $ 1,635, 200 1,226,790 408, 410 610,000 $ (201,590) Hi-Tek produced and sold 60,200 units of B300 at a price of $19 per unit and 12,600 units of T500 at a price of $39 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 T500 Total $ 400,500 $ 162,900 $ 563, 400 $ 120, 300 $ 42,600 162,000 500, 490 $1,226,790 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 $110,000 of the company's advertising expenses could be directly traced to 1300 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) Manufacturing Overhead $ 200,000 Activity B300 Tsoo Total 90,900 82,100 153,000 Help 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 $110,000 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: Manufacturing Activity Cost Pool (and Activity Measure) Activity Overhead 8398 T500 Total Machining (nachine-hours) $ 298,080 90, 980 62,100 153,000 Setups (setup hours) 131, 610 71 250 321 Product -sustaining (number of products) 100, 400 2. Other (organization-sustaining costs) 60,400 NA NA NA Total manufacturing overhead cost $ 500,490 1 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. Required 1 Required 2 Required 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.) B300 T500 Total Product margin $ 0
