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Problem 7-16 (Algo) Comparing Traditional and Activity-Based Product Margins (L07-1, L07-3, L07-4. LO7-5) Hi-Tek Manufacturing, Incorporated, makes two types of industrial component partsthe 8300 and the 1500. An absorption costing Income statement for the most recent period is shown: HI-Tek Manufacturing Tncorporated Income Statement Sales $ 1,701,300 Cost of goods sold 1,251,260 Gross margin 450,040 Selling and administrative expenses. 570,000 Net operating loss $(119,960) HI-Tek produced and sold 60,300 units of 8300 at a price of $20 per unit and 12700 units of T500 at a price of $99 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: 300 1500 Total Direct materials $ 400,200 $ 162,700 $ 562,900 Direct labor $ 120,00 $ 42,00 162,00 Manufacturing overhead S25560 Cost of goods sold $1,251,260 The company has created an activity-based costing system to evaluate the profitability of its products. Hi Teklimplementation team concluded that $58,000 and $102,000 of the company's advertising expenses could be directly traced to and T500, respectively. The remainder of the selling and administrative expenses was organization sustaining in nature ABC team also distributed the company's manufacturing overhead to four activities as shown below. The company has created an activity based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $58,000 and $103,000 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 Cost Pool (and Activity Measure) Activity Overhead 3300 T500 Total Machining (machine-hours) $ 213,220 90,200 Setups (setup hours) 62, 100 152,300 152,040 72 Product-sustaining (number of products) 290 362 100,200 1 1 2 Other (organization-sustaining costs) 60.1ee NA NA NA Total manufacturing overhead cost 3 525,560 Required: 1. Compute the product margins for the 8300 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. 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 T500 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 Activity Cost Pool and Activity Measure) Machining (machine-hours) Setups (setup hours) Product sustaining (number of products) Other (organization sustaining costs) Total manufacturing overhead cost Manufacturing Overhead $ 213,220 152,840 190,200 60,180 $ 525, 560 3385 98,290 72 1 NA Activity T500 62,198 290 1 Total 152,300 352 2 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 B300 and T500 under the activity-based costing system. (Negative product is should be indicated by a minus slan, Round your intermediate calculations to 2 decimal places.) B300 T500 Total Product margin $ Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a quantitative comparison of the traditional and activity based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place and and other answers to the nearest whole dollar amounts B300 T500 % of % of Total Amount Amount Amount Traditional Cost System $ S 0 $ Total cost assigned to products 0 $ 0 Total cost B300 T500 To mount of Total Amount of Total Amount Amount Amount Activity Based Costing System Direct costs su prvu S Total cost B300 T500 Total Amount % of Total Amount % of Total Amount Amount Amount Activity-Based Costing System Direct costs Indirect costs 0 $ 0 0 $ Total cost assigned to products Costs not assigned to products Total cost