Problem 7-16 Comparing Traditional and Activity-Based Product Margins (L07-1, LO7-3, LO7-4, LO7-5) 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 Coat of goods sold Gross margin Selling and administrative expenses Net operating loss $ 1,710,000 1,240,332 469,668 580,000 $ (110,332) Hi-Tek produced and sold 60,100 units of B300 at a price of $20 per unit and 12,700 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: B300 T500 Total Direct materials $ 400,200 $ 162,200 $ 562,400 Direct labor $ 120,000 $ 42,600 162, 600 Manufacturing overhead 515,332 61322 B300 T500 $ 400,200 $ 162,200 $ 120,000 $ 42, 600 Direct materials Direct labor Manufacturing overhead Cost of goods sold Total S 562,400 162, 600 515,332 $ 1,240,332 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $55,000 and $105,000 of the company's 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 company's manufacturing overhead to four activities as shown below: Activity Coat Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead coat Manufacturing Overhead $ 200,692 153, 340 100, 400 60, 900 $ 515,332 Activity B300 T500 Total 90, 800 62,400 153,200 74 300 374 1 1 2 NA NA NA 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. 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 comp intermediate calculations to 2 decimal places and final answers to the B300 T500 Total Product margin $ 0 K Required 1 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-E be indicated by a minus sign. Round your intermediate calculations to B300 T500 Total $ 0 Product margin