Help Save & Exit Sub Check my wa 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: points Hi-Tek Manufacturing Ine. Income statement Sales Cost of goods sold Gross margin Selling and administrative Net operating loss eBook $ 2,100,000 1.600.000 500,000 550.000 $ (50,000) References Hl-Tek produced and sold 70,000 units of B300 at a price of $20 per unit and 17,500 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: B300 $ 436,300 $ 200,000 T500 $ 251,700 $ 104,000 Direct materials Direct labor Manufacturing overhead Cost of goods sold Total $ 688,000 304,000 608,000 $1,600,000 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $50,000 and $100,000 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 $ 213,500 157.500 120,000 117,000 Activity D300T500 Total 90,000 62,500 152,500 75300 375 Activity Cost Pool (and Activity Meanure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) A Prev 1 of 1 dollars as the allocation base. Additional information relating to the company's two product lines is shown below. Check my 300 $ 436,300 $ 200,000 Direct materials Direct labor Manufacturing overhead Coat of goods sold Total T500 $ 251,700 $ 688,000 $104,000 304,000 608,000 $1,600,000 eBook Print The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC Implementation team concluded that $50,000 and $100,000 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. "MO ferences 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 $ 213,500 157.500 120,000 117.000 $ 608,000 Activity B300 T500Total 90,000 62,500 152,500 75 300 375 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