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 Yok Manufacturing Inc. Income Statement Sales $ 1,762,100 cost of goods sold 1,223,00 Gross margin 539,020 Selling and administrative expenses 500 M Net operating loss 5 (50,900) Hi-Tek produced and sold 60,100 units of B300 at a price of $21 per unit and 12.500 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 Direct materials Direct labor Manufacturing overhead Cost of goods sold 8300 15.09 $400,100 $162,400 $ 120,800 $ 43,000 Total 562,500 161,300 496,780 $1,223,000 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 $102,000 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 Mease) Overhead BO Machining (machine hours) $ 205,020 90,700 62,300 151,000 Setups (setup hours) 129,160 Product - sustainine number of products 101.800 Other (organization Sustaining costs) Total manufacturing overhead cost $196,80 T500 Total 78 1 TU 1 308 2 NA 60,000 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. 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 Required 2 Required a Compute the product margins for the 1300 and Tsoo 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 $ 0 H Required 2 > Required: 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 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 Rolpired 2 Required 3 Compute the product margins for B300 and T500 under the activity-based costing system. (Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.) B300 T500 Total S Product margin Required: 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 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 Prepare a quantitative comparison of the traditional and activity-based cost suignments. (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 3300 T500 Total of %o Amount Amount Amount Traditional Cost System % Total cost assigned to products $ $ 0 $ O Total cost $ 0 B300 T500 Total % of % of Total Amount Amount Amount Total Amount Amount Activity-Based Costing System Direct costs % % % % 96 Indirect costs: 96 % % % % % $ 0 $ 0 Total cost assigned to products Costs not assigned to products: Total cost $ 0