Problem 7-16 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4, LO7-5) 35 points 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 eBook Sales Cost of goods sold Gross margin 1,699,300 1,235,816 463,484 590,600 (126,516) Print References Selling and administrative expenses Net operating loss Hi-Tek produced and sold 60,200 units of B300 at a price of $20 per unit and 12,700 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: B380 TS80 Total Direct materials Direct labor Manufacturing overhead Cost of goods sold 400,480 $ 162,400 562,800 163,400 509,616 1,235,816 120,700 42,700 The company has team concluded that $59,000 and $100,00 respectively. The remainder of the selling and administrative expenses was organizatio created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation O of the company's advertising expenses could be directly traced to B300 and T500 n-sustaining in nature. The ABC team also distributed the company's manufacturing overhead to four activities as shown below Manufacturing Overhead Activit Activity Cost Pool (and Activity Measure) Machinine (machine-hours) B300 T500 Total $ 210.036 9.100 62.100 152.200 Mc