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Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts--the 8300 and the 1500. An absorption costing Income statement for the most recent period is

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Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts--the 8300 and the 1500. An absorption costing Income statement for the most recent period is shown Hi-Tek Manufacturing Incorporated Income Statement Sales $ 2.100,000 Cost of goods sold 1,6ee, Gross margin See, eee Selling and administrative expenses 550, ece het operating loss $(50,000) Hi-Tek produced and sold 70,000 units of B300 at a price of $20 per unit and 17.500 units of T500 at a price of $40 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 0300 T500 Total Oirect materials $1436,300 $ 251,700 $ 600,000 Direct Labor $ 200,000 $184,000 304,000 Manufacturing overhead 608,000 Cost of gods sold $ 1.600,000 The company has created an activity-based costing system to evaluate the profitability of its products Hi-Teks ABC implementation team concluded that $50.000 and $100.000 of the company's advertising expenses could be directly traced to B300 and 1500, 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. Manufacturing Activity Activity Cost Pool and Activity Measure) Overhead 5300 Tseo Total Machining (machine-hours) 5 215x500 90,000 62,500 152,500 Setups (setup hours) 157,500 Productesostatning number of products 120,000 1 1 2 Other (organization sustaining costs) 117.000 NA 5.600.000 Total sanufacturing overhead cost 75 300 325 MA TA 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

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