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	$ 1,691,400
Cost of goods sold	1,230,152
Gross margin	461,248
Selling and administrative expenses	590,000
Net operating loss	$ (128,752)

Hi-Tek produced and sold 60,000 units of B300 at a price of $20 per unit and 12,600 units of T500 at a price of $39 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	$ 400,400	$ 162,800	$ 563,200
Direct labor	$ 120,700	$ 42,100	162,800
Manufacturing overhead			504,152
Cost of goods sold			$ 1,230,152

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Teks ABC implementation team concluded that $54,000 and $102,000 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 Overhead	Activity
		B300	T500	Total
Machining (machine-hours)	$ 213,782	90,900	62,900	153,800
Setups (setup hours)	128,570	79	220	299
Product-sustaining (number of products)	100,800	1	1	2
Other (organization-sustaining costs)	61,000	NA	NA	NA
Total manufacturing overhead cost	$ 504,152

Required:

1. Compute the product margins for the B300, T500 and total 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.

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