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 below:

Hi-Tek Manufacturing Inc. Income Statement
Sales	$	1,697,300
Cost of goods sold		1,214,004
Gross margin		483,296
Selling and administrative expenses		560,000
Net operating loss	$	(76,704)

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 $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	$	120,700	$	42,200		162,900
Manufacturing overhead						488,504
Cost of goods sold					$	1,214,004

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Teks ABC implementation team concluded that $52,000 and $106,000 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

Activity

Activity Cost Pool (and Activity Measure)

Overhead

B300

T500

Total

Machining (machine-hours)

$

209,884

90,900

62,300

153,200

Setups (setup hours)

118,020

71

210

281

Product-sustaining (number of products)

100,200

1

1

2

Other (organization-sustaining costs)

60,400

NA

NA

NA

Total manufacturing overhead cost

$

488,504

QUESTION 1

Required

1.

Compute the product margins for the B300 and T500 under the companys traditional costing system. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollars.)

QUESTION 2

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.)

QUESTION 3

Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answer to 1 decimal place. (i.e. .1234 should be entered as 12.3) and other answers to nearest whole dollar amounts.)

Hi-Tek Manufacturing Inc. makes two types of industrial component parts-the B300 and the T500. Arn absorption costing income statement for the most recent period is shown below: Hi-Tek Manufacturing Ind Income Statement Sales Cost of goods sold $1,697,300 1,214,004 Gross margin Selling and administrative expenses 483,296 560,000 Net operating loss S (76,704) 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 $39 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 Direct labor Manufacturing overhead $ 400,400 162,200 562,600 162,900 488,504 120,700 42,200 Cost of goods sold $1,214,004 The company has created an activity-based costing system to evaluate the profitability of its products. Hi- Tek's ABC implementation team concluded that $52,000 and $106,000 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