Hi-Tek Manufacturing, Inc., makes two types of industrial component partsthe B300 and the T500. An absorption costing income statement for the most recent period is shown:

Hi-Tek Manufacturing Inc. Income Statement
Sales	$	1,691,400
Cost of goods sold		1,219,910
Gross margin		471,490
Selling and administrative expenses		570,000
Net operating loss	$	(98,510	)

Hi-Tek produced and sold 60,000 units of B300 at a price of $20 per unit and 12,600 units of T500 at a price of $39 per unit. The companys 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 companys two product lines is shown below:

	B300		T500		Total
Direct materials	$	400,400	$	162,200	$	562,600
Direct labor	$	120,500	$	42,400		162,900
Manufacturing overhead						494,410
Cost of goods sold					$	1,219,910

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Teks ABC implementation team concluded that $54,000 and $101,000 of the companys 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 companys manufacturing overhead to four activities as shown below:

	Manufacturing Overhead			Activity
Activity Cost Pool (and Activity Measure)				B300	T500	Total
Machining (machine-hours)	$	201,960		90,100	62,900	153,000
Setups (setup hours)		130,950		71	220	291
Product-sustaining (number of products)		100,800		1	1	2
Other (organization-sustaining costs)		60,700		NA	NA	NA
Total manufacturing overhead cost	$	494,410

Required:

1. Compute the product margins for the B300 and T500 under the companys traditional costing system.

	B300	T500	Total
Product margin

2. Compute the product margins for B300 and T500 under the activity-based costing system.

	B300	T500	Total
Product margin

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

	B300			T500			Total
		% of			% of
	Amount			Amount			Amount
Traditional Cost System
			%			%
			%			%
			%			%
Total cost assigned to products
Total cost
	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
Costs not assigned to products:
Total cost