Hi-Tek Manufacturing, Inc., makes two types of industrial component parts--the B300 and the 1500. An absorption costing income statement for the most recent period is shown: Hi-Tek Manufacturing Inc. Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss $ 2,100,000 1,600,000 500,000 550,000 $ (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. Direct materials Direct labor Manufacturing overhead Cost of goods sold 8.300 T500 Total $ 436,300 $ 251,700 $ 688,000 $ 200,000 $ 100,000 304,000 608,000 $ 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 1300 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. Manufacturing Activity Activity Cost Pool (and Activity Measure) Overhead Total Machining (machine-hours) $ 213,500 90,000 62,500 152,500 Setups (setup hours) 157,500 75 375 8300 T500 300 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, see 157.500 120, eee 117,00 $ 60,000 B300 90,000 75 1 NA Activity T500 Total 62,500 152,500 300 1 2 NA NA 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 RECE Required 2 > 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 $ 608,000 B300 90,000 75 1 NA Activity T500 Total 62,500 152,500 300 375 1 2 NA NA 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 B300 and 7500 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 B300 T500 Total % of % of Amount Total Amount Amount Total Amount Amount Traditional Cost System % % % % % Total cost assigned to products Total cost B300 T500 % of % of Total Amount Amount Amount Total Amount Amount Activity-Based Costing System Direct costs % % % % % Indirect costs 96 % % % % % Total cost assigned to products Costs not assigned to products

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