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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 Statenent Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss $ 1,757, 700 1,261,836 495,864 590,000 $ (94,136) Hi-Tek produced and sold 60,300 units of B300 at a price of $21 per unit and 12,600 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: Direct materiala Direct labor Manufacturing overhead Coat of goods sold 8.300 T500 Total $ 400,300 $ 162,300 $ 562,600 $ 120,300 $ 42,600 162,900 536, 336 $ 1,261,636 The company has created an activity based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $54,000 and $110,000 of the company's advertising expenses could be directly traced to 1300 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: Manufacturing Overhead $ 209,336 165,000 101,800 60,200 $ 536,336 Activity Cont Pool (and Activity Measure) Machining (machine-hours) Setupa (setup hours) Product-sustaining (number of products) Other (organization-sustaining coato) Total manufacturing overhead coat Activity B300 T500 Total 90,500 62,300 152,800 75 375 1 1 2 NA NA NA 300 Required: 1. Compute the product margins for the 8300 and T500 under the company's traditional costing system. 2. Compute the product margins for 8300 and T500 under the activity based costing system anal and the hacerns Assianments

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