Hi$-$Tek Manufacturing, Incorporated, makes two industrial component parts$$B$300$ and T$500.$ An absorption costing income statement for the most recent period is shown below: Hi$-$Tek Manufacturing, Incorporated, makes two industrial component parts$-$B$300$ and T$500.$ An absorption costing income statement

for the most recent period is shown below:

Hi$-$Tek produced and sold $60,400$ units of B$300$ at a price of $$19$ per unit and $12,800$ units of T$500$ at a price of $$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:

The company created an activity$-$based costing system to evaluate the profitability of its products. Hi$-$Tek's ABC implementation team

concluded that $$54,000$ and $$102,000$ of the company's advertising expenses could be directly traced to B$300$ and T$500,$

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:

Required:

Compute the product margins for B $300$ and T $500$ under the company's traditional costing system.

Compute the product margins for B$300$ and T$500$ under the activity$-$based costing system.

Prepare a quantitative comparison of the traditional and activity$-$based cost assignments.

Hi$-$Tek Manufacturing, Incorporated

Income Statement

Sales $ $1,646,800$

Cost of goods sold $1,226,240$

Gross margin $420,560$

Selling and administrative expenses $610,000$

Net operating loss $ $(189,440)$

Hi$-$Tek produced and sold $60,400$ units of B$300$ at a price of $$19$ per unit and $12,800$ units of T$500$ at a price of $$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:

B$300$ T$500$ Total

Direct materials $ $400,300$ $ $162,000$ $ $562,300$

Direct labor $ $120,300$ $ $42,300162,600$

Manufacturing overhead $501,340$

Cost of goods sold $ $1,226,240$

The company created an activity$-$based costing system to evaluate the profitability of its products. Hi$-$Tek$$s ABC implementation team concluded that $$54,000$ and $$102,000$ of the company$$s advertising expenses could be directly traced to B$300$ and T$500,$ 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$)$ Manufacturing Overhead Activity

B$300$ T$500$ Total

Machining $($machine$-$hours$)$ $ $214,48090,30062,900153,200$

Setups $($setup hours$)125,56072220292$

Product$-$sustaining $($number of products$)100,800112$

Other $($organization$-$sustaining costs$)60,500$ NA NA NA

Total manufacturing overhead cost $ $501,340$

Prepare a quantitative comparison of the traditional and activity$-$based cost assignments using the same chart below.Note: 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.

$\backslash$table$[[,$B$300,$T$500,$Total Amount$],[,$Amount,$\backslash$table$[[\%$ of$],[$Total$],[$Amount$]],$Amount,$\backslash$table$[[\%$ of$],[$Total$],[$Amount$]]],[],[$Traditional Cost System$],[$Direct materials$],[$Direct labor$],[$Manufacturing overhead$],[$Total cost assigned to products,$$,,$$$,,$$$],[$Selling and administrative$],[$Total cost$,,,,,$$$],[$B$300,$T$500,$Total Amount$],[,\%$ of$,,\%$ of$],[$Amount$,\backslash$table$[[$Total$],[$Amount$]],$Amount,$\backslash$table$[[$Total$],[$Amount$]]],[$Activity$-$Based Costing System$],[$Direct costs:$],[$Direct materials$],[$Direct labor$],[$Manufacturing overhead$],[$Indirect costs:$],[$Machining$],[$Setups$],[$Product sustaining$],[$Total cost assigned to products,$$,,$$$,,0],[$Costs not assigned to products:$],[$Selling and administrative$],[$Other$],[$Total cost$,,,,,$$$]]$