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https:/ nework Saved Help Problem 7-16 Comparing Traditional and Activity-Based Product Margins [L07-1, LO7-3, L07-4, LO75 Hi-Tek Manufacturing, Inc., makes two types of industrial component

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https:/ nework Saved Help Problem 7-16 Comparing Traditional and Activity-Based Product Margins [L07-1, LO7-3, L07-4, LO75 Hi-Tek Manufacturing, Inc., 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 Inc Income Statement Sales Cost of goods sold Gross margin selling and administrative expenses 560,000 Net operating loss $1,753,880 1,203,185 558,615 $(9,385) Hi-Tek produced and sold 60,300 units of B300 at a price of $21 per unit and 12,500 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 B300 T500 Total Direct materials Direct labor Manufacturing overhead Cost of goods solo 400,500 $162,100 562,600 120,200 42,200 162,400 478,185 $1,203,185 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $59.000 and $106,000 of the company's advertising expenses could be directly traced to 8300 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

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