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Hi - Tek Manufacturing, Incorporated, makes two types of industrial component parts - the B 3 0 0 and the T 5 0 0 .

Hi-Tek Manufacturing, Incorporated, 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 produced and sold 60,200 units of B300 at a price of $20 per unit and 12,700 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:
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 $108,000 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:
Required:
Compute the product margins for the B300 and T500 under the company's traditional costing system.
Compute the product margins for B300 and T500 under the activity-based costing system.
Prepare a quantitative comparison of the traditional and activity-based cost assignments.
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