Hi$-$Tek Manufacturing, Incorporated, makes two types of industrial component parts$-$the B$300$ and the T$500.$ An absorption costing

income statement for the most recent period is shown:

Hi$-$Tek produced and sold $60,500$ units of B$300$ at a price of $$19$ per unit and $12,600$ units of T$500$ at a price of $$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 has created an activity$-$based costing system to evaluate the profitability of its products. Hi$-$Tek's ABC implementation

team concluded that $$51,000$ and $$110,000$ 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 the 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.

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