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. $ 2,100,000 Income Statement Sales Cost of goods sold 1,600,000 Gross margin 500,000 Selling and administrative expenses 550,000 Net operating loss $ (50,000) HI-Tek produced and sold 70,000 units of B300 at a price of $20 per unit and 17,500 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 lines is shown below: 8300 T500 Direct materials Direct labor Manufacturing overhead Cost of goods sold $ 436,300 $ 251,700 $ $ 200,000 $ 104,000 Total 688,000 304,000 608,000 $ 1,600,000 The company has created an activity-based costing system to evaluate the profitability of its products. HI-Tek's ABC Implementation team concluded that $50,000 and $100,000 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 Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost Manufacturing Activity Overhead $ 213,500 157,500 120,000 8300 90,000 T500 Total 62,500 152,500 75 300 375 1 1 2 117,000 NA NA $ 608,000 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the product margins for the B300 and T500 under the company's traditional costing system. B300 T500 Total Product margin $ 363,700 $ 136,300 $ 500,000 Required 1 Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the product margins for B300 and T500 under the activity-based costing system. (Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.) Product margin B300 T500 Total $ 496,200 $ 29,200 $ 525,400 < Required 1 Required 3 > Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place.) B300 T500 Total % of % of Amount Total Amount Amount Total Amount Amount Traditional Cost System Total cost assigned to products $ Total cost 96 xx % % %6 $ $ 0 $ 0 B300 T500 % of % of Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs: Indirect costs: % % 96 % % %6 96 %6 96 % % % Total cost assigned to products Costs not assigned to products: $ $ $ 0 Total cost $