Required:

1. Compute the product margins for the B300 and T500 under the companys 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.

income statement for the most recent period is shown: Hi. Tek produced and sold 60,500 units of 8300 at a price of $19 per unit and 12,600 units of TS00 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: The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $52,000 and $107,000 of the company's advertising expenses could be directly traced to 8300 and 5500 , respectively. The remainder of the selling and administrative expenses was orcjanization-sustoining in nature. The ABC team also distributed the company's manufacturing overhead to four activities as shown below