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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

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 $ 1,772,400
Cost of goods sold 1,223,314
Gross margin 549,086
Selling and administrative expenses 560,000
Net operating loss $ (10,914)

Hi-Tek produced and sold 60,400 units of B300 at a price of $21 per unit and 12,600 units of T500 at a price of $40 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 $ 400,200 $ 162,400 $ 562,600
Direct labor $ 120,600 $ 42,300 162,900
Manufacturing overhead 497,814
Cost of goods sold $ 1,223,314

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Teks ABC implementation team concluded that $58,000 and $105,000 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) $ 211,554 90,600 62,700 153,300
Setups (setup hours) 125,460 76 230 306
Product-sustaining (number of products) 100,200 1 1 2
Other (organization-sustaining costs) 60,600 NA NA NA
Total manufacturing overhead cost $ 497,814

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.)

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.)

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.)

traditional costing system and an activity based costing system. (amount and percentage of total amount for B300 and T500, then total amount

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