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:

Hi-Tek Manufacturing Inc. Income Statement
Sales	$	1,645,700
Cost of goods sold		1,232,603
Gross margin		413,097
Selling and administrative expenses		610,000
Net operating loss	$	(196,903	)

Hi-Tek produced and sold 60,300 units of B300 at a price of $19 per unit and 12,500 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	$	400,700	$	162,300	$	563,000
Direct labor	$	120,300	$	43,000		163,300
Manufacturing overhead						506,303
Cost of goods sold					$	1,232,603

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 $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 Overhead			Activity
Activity Cost Pool (and Activity Measure)				B300	T500	Total
Machining (machine-hours)	$	212,253		90,200	62,500	152,700
Setups (setup hours)		131,850		73	220	293
Product-sustaining (number of products)		102,000		1	1	2
Other (organization-sustaining costs)		60,200		NA	NA	NA
Total manufacturing overhead cost	$	506,303

Required:

1. Compute the product margins for the B300 and T500 under the companys 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.

1.

	B300	T500	Total
Product margin			$0

2.

	B300	T500	Total
Product margin			$0

	B300			T500			Total
		% of			% of
	Amount			Amount			Amount
Traditional Cost System
			%			%
			%			%
			%			%
Total cost assigned to products	$0			$0			$0
Total cost							$0
	B300			T500			Total
		% of			% of
	Amount	Total Amount		Amount	Total Amount		Amount
Activity-Based Costing System
Direct costs:
			%			%
			%			%
			%			%
Indirect costs:
			%			%
			%			%
			%			%
Total cost assigned to products	$0			$0			0
Costs not assigned to products:
Total cost							$0