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 $ 1,718,000 Cost of goods sold 1,251,280 Gross margin 466,720 Selling and administrative expenses 610,000 Net operating loss $ (143,280) Hi-Tek produced and sold 60,300 units of B300 at a price of $20 per unit and 12,800 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 $ 400,500 $ 162,200 $ 562,700 Direct labor $ 120,300 $ 42,300 162,600 Manufacturing overhead 525,980 Cost of goods sold $ 1,251,280 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Teks ABC implementation team concluded that $60,000 and $108,000 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) $ 214,200 90,500 62,500 153,000 Setups (setup hours) 150,780 79 280 359 Product-sustaining (number of products) 101,000 1 1 2 Other (organization-sustaining costs) 60,000 NA NA NA Total manufacturing overhead cost $ 525,980 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.)

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 oalculations to 2 decimal places.) B300 T500 Product margin 3. Prepare a quantitstive comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answer to 1 decimal place. [ie 1234 should be entered as 12.3) and other answers to nearest whole dollar amounts.) 8300 T500 Total %of %of Total Amount Total Amount Traditional Cost System Total cost assigned to products Total cost B300 T500 Total %of % of Total Amount Total Amount Activity-Based Costing System Direct costs Indirect costs: Total cost assigned to products Costs not assigned to products: Total cost