Problem 2- Blue Sun Manufacturing BLUE SUN ik Blue Sun 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: Blue Sun Manufacturing Inc. 8300 Income Statement TSC0 Sales $ 1,709,200 60,500 x 20 Cost of goods sold 1,241,108 499,200 Gross margin 468,092 Selling and administrative expenses 640.000 1709 200 $ (171,908) Net operating loss 13.10000 Blue Sun produced and sold 60,500 units of B300 at a price of $20 per unit and 12,800 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: Direct materials Direct labor Manufacturing overhead Cost of goods sold B300 T500 Total S 400,400 S 162.300 S 562.700 $120.200 S 42.100 162.300 516.108 S 1.241.108 468,092 lue Sun created an activity-based costing system to evaluate the profitability of its roducts. The ABC implementation team concluded that $56.000 and $105,000 of the ompany's advertising expenses could be directly traced to B300 and T500, espectively. 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. 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 $ 211278 142.330 102.000 80 500 $ 516.108 6300 90.200 71 1 NA Activity T500 62.900 260 1 NA Total 153.100 1.55 331 2 NA Required for Blue Sun: 1. Compute the product margins for the B300 and 1500 under the company's traditional costing system 2. Compute the product margins for B300 and 1500 under the activity-based costing system