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 $ 2,100,000 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: B300 T500 Total Direct materials $ 436,300 $ 251,700 $ 688,000 $ 200,000 $104,900 304,000 Manufacturing overhead 608,000 Cost of goods sold $1,600,000 Direct labor 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 8300 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 Overhead $ 213,500 157,500 120,000 117,000 $ 688,000 Activity 3300 T500 Total 90,000 62,500 152,500 75 300 375 1 1 2 NA NA NA Required: 1. Compute the product margins for the 8300 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 Required Required 2 > 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 Required2 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.) B300 T500 Total Product margin (Required 1 Required 3 > decimal places and "Percentage" answers to 1 decimal place.) T500 Total B300 % of Total Amount % of Amount Amount Total Amount Amount Traditional Cost System % % de eR % % Total cost assigned to products Total cost B300 % of Total Amount T500 % of Total Amount Amount Amount Amount Activity-Based Costing System Direct costs: % % % RRR % % % Indirect costs % % * % % % Total cost assigned to products Costs not assigned to products Total cost Prev 1 of 3 !!! Next >