Hi-Tek Manufacturing, Incorporated, 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 Incorporated

Income Statement

Sales$ 1,645,900

Cost of goods sold1,245,514

Gross margin400,386

Selling and administrative expenses620,000

Net operating loss$ (219,614)

Hi-Tek produced and sold 60,100 units of B300 at a price of $19 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:

B300T500Total

Direct materials$ 400,300$ 162,800$ 563,100

Direct labor$ 120,900$ 42,400163,300

Manufacturing overhead 519,114

Cost of goods sold $ 1,245,514

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Teks ABC implementation team concluded that $55,000 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:

Activity Cost Pool (and Activity Measure)Manufacturing OverheadActivity

B300T500Total

Machining (machine-hours)$ 201,56490,20062,500152,700

Setups (setup hours)156,15077270347

Product-sustaining (number of products)101,000112

Other (organization-sustaining costs)60,400NANANA

Total manufacturing overhead cost$ 519,114

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.

2 Product -sustaining (number of products) other (organization-sustaining costs) Total manufacturing overhead cost 101,000 60,400 $ 519, 114 1 NA NA 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 1500 under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the product margins for the B300 and TSOO under the company's traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) B300 T500 Total Product margin Required Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 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.) B300 T500 Total Product margin 3300 T100 of of Tour Amour Amount Ant 10 polas Tidional Cost System Total cost and to products Total cos! ooo so Total Am mount Am A veding Coco