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	$ 1, 710,000
Cost of goods sold	$ 1,221,456
Gross margin	$ 488,544
Selling and administrative expenses	630,000
Net operating loss	$ (141,456)

Hi-Tek produced and sold 60,100 units of B300 at a price of $20 per unit and 12,700 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 line is shown below:

	B300	T500	Total
Direct materials	$ 400,900	$ 162,200	$ 563,100
Direct labor	$ 120,500	$ 42,300	$ 162,800
Manufacturing overhead			$ 495,556
Cost of goods sold			$ 1,221,456

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 $ 107,000 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:

	Activity
Activity Cost pool (and Activity measure)	Manufacturing overhead	B300	T500	Total
Machining (machine-hours)	$ 210,726	$ 90,100	$ 62,600	$ 152,700
Setups (setup hours)	$ 124,230	73	230	303
Product-sustaining (number of products)	100,200	1	1	2
Other (organization-sustaining costs)	60,400	NA	NA	NA
Total manufacturing overhead cost	$ 495,556

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.

	B300	T500	Total
		% of		% of
	Amount						Amount
Traditional Cost System
			%			%
			%			%
			%			%
Total Cost assigned to products	$						$
Total							$
	B300	T500	Total
		% of		% of
	Amount	Total amount	amount	Total amount	Amount
Activity-Based costing System
Direct costs:
			%			%
			%			%
			%			%
Indirect Costs:
			%			%
			%			%
			%			%
Total cost assigned to products	$			$			$
Cost not assigned to products:
Total cost							$