HI-Tek Manufacturing, Incorporated, makes two types of Industrial component parts-the B300 and the T500. An absorption costing Income statement for the most recent period is shown: Hi-Tek Manufacturing Incorporated Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss Direct materials Direct labor HI-Tek produced and sold 60,100 units of B300 at a price of $20 per unit and 12,800 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. Manufacturing overhead Cost of goods sold $ 1,701,200 1,237,675 Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) 463,525 570,000 $ (106,475) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost B300 $ 400,500 $ 120,900 T500 $ 162,900 $ 42,700 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC Implementation team concluded that $57,000 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 poverhead to four activities as shown below. Manufacturing Overhead Total $ 563,400 163,600 510,675 $ 1,237,675 $ 206,955 141,120 101,600 61,000 $ 510,675 B300 90,600 76 1 NA Activity T500 62,700 260 1 NA Total 153,300 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. 336 2 NA

Hi-Tek Manufacturing. Incorporated, makes two types of industnal component parts - the B300 and the T500. An absorption costing income statement for the most recent period is shown: H-Tek produced and sold 60,100 units of B300 at a pnce of $20 per unit and 12.800 units of T500 at a price of $39 per untt The company's traditional cost system allocates manufactunng 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 The company has created an activity-based costing system to evaluate the profitablity of its products. Hr-Tek's ABC implementation team concluded that $57,000 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. 1. Compute the product margins for the B300 and T500 under the company's traditional costing system. Required: 2. Compute the product margins for 8300 and T500 under the actuvity-based costing system. 3. Prepare a quantitative comporison of the tradituonal and activity-Dased cost assignments