Foam Products, Inc., makes foam seat cushions for the automotive and aerospace industries. The company's activity-based costing system has four activity cost pools, which are listed below along with their activity measures and activity rates: Activity Cost Pool Supporting direct labor Batch processing Order processing Customer service Activity Measure Number of direct labor-hours Number of batches Number of orders Number of customers Activity Rate $ 11 per direct labor-hour $ 87 per batch $ 277 per order $ 2,603 per customer The company just completed a single order from Interstate Trucking for 2,800 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.6 direct labor-hours. The selling price was $141.90 per unit, the direct materials cost was $105 per unit, and the direct labor cost was $14.70 per unit. This was Interstate Trucking's only order during the year. Required: Calculate the customer margin on sales to Interstate Trucking for the year. Interstate Trucking Customer Margin-ABC Analysis Costs: a Customer margin Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours per Annual Unit Production 0.60 25,000 units 0.20 46,000 units Hubs Sprockets Additional information about the company follows: a. Hubs require $38 in direct materials per unit, and Sprockets require $18. b. The direct labor wage rate is $17 per hour. c. Hubs require special equipment and are more complex to manufacture than Sprockets. d. The ABC system has the following activity cost pools: Activity Activity Cost Pool (Activity Measure) Machine setups (number of setups ) Special processing machine-hours) General factory (organization-sustaining) Estimated Overhead Cost $ 19,665 $ 230,000 $134,600 Hubs Sprockets Total 115 92207 4,600 0 4,600 NA NA NA Required: 1. Compute the activity rate for each activity cost pool. 2. Determine the unit product cost of each product according to the ABC system. 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: Hi-Tek Manufacturing Inc. Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss $ 1,710.000 1,229,076 480,924 590.000 $ (109,076) Hi-Tek produced and sold 60,300 units of B300 at 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 allocation base. Additional information relating to the company's two product lines is shown below: B300 $ 400.500 $ 121.000 T500 $ 162,300 $ 42,200 Direct materials Direct labor Manufacturing overhead Cost of goods sold Total $ 562,800 163,200 503,076 $1,229.076 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $57,000 and $103,000 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 Overhead $ 210,706 129,970 101,800 60, 600 $ 503,076 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 Activity B300T500 Total 90.800 63.000 153.800 77 240 317 NA NA NA 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