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Problem 7-16 (Algo) Comparing Traditional and Activity-Based Product Margins (L07-1, L07-3, L07-4, LO7-5) Hi-Tek Manufacturing, Incorporated, 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 Hanufacturing Incorporated Income Statement Sales $ 1,770, 180 Cost of goods sold 1, 249,460 Gross margin Selling and administrative expenses Net operating loss $ (59,360) Hi-Tek produced and sold 60,100 units of B300 at a price of $21 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: 520,640 580,000 8300 $100,000 $ 120,100 T500 $ 162,400 $ 43,000 Direct materials Direct labor Manufacturing overhead Cost of goods sold Total $ 562,400 163,300 523,768 $ 1,249,460 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 $109,000 of the company's advertising expenses could be directly traced to B300 and 7500, 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: 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 $109,000 of the company's advertising expenses could be directly traced to 1200 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 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 $ 205,740 156,520 101,400 60,100 $ 523,760 3300 90,300 74 1 NA Activity T500 62,100 290 1 NA Total 152,400 364 2 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 1500 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 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 Required 1 Required 2 Required 3 Compute the product margins for the B300 and T500 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 Required 1 Required 2 Required 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 Product margin Prepare a quantitative comparison of the traditional and activity-based cost assignments. (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.) B300 T500 % of % of Total Amount Amount Amount Traditional Cost System Total cost assigned to products Total cost B300 T500 Total Amount % of Total Amount % of Total Amount Amount Amount Activity-Based Costing System Direct costs Indirect costs Total cost assigned to products Costs not assigned to products Total cost