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Hi-Tek Manufacturing, Inc., makes two types of industrialcomponent parts—the B300 and the T500. An absorption costing incomestatement for the most recent period is shown:

Hi-Tek Manufacturing Inc. Income Statement
Sales	$	1,753,800
Cost of goods sold		1,234,694
Gross margin		519,106
Selling and administrative expenses		570,000
Net operating loss	$	(50,894	)

Hi-Tek produced and sold 60,300 units of B300 at a price of $21per unit and 12,500 units of T500 at a price of $39 per unit. Thecompany’s traditional cost system allocates manufacturing overheadto products using a plantwide overhead rate and direct labordollars as the allocation base. Additional information relating tothe company’s two product lines is shown below:

	B300		T500		Total
Direct materials	$	400,900	$	162,900	$	563,800
Direct labor	$	120,500	$	42,400		162,900
Manufacturing overhead						507,994
Cost of goods sold					$	1,234,694

The company has created an activity-based costing system toevaluate the profitability of its products. Hi-Tek’s ABCimplementation team concluded that $54,000 and $105,000 of thecompany’s advertising expenses could be directly traced to B300 andT500, respectively. The remainder of the selling and administrativeexpenses was organization-sustaining in nature. The ABC team alsodistributed the company’s manufacturing overhead to four activitiesas shown below:

	Manufacturing Overhead			Activity
Activity Cost Pool (and Activity Measure)				B300	T500	Total
Machining (machine-hours)	$	209,884		91,000	62,200	153,200
Setups (setup hours)		136,310		77	240	317
Product-sustaining (number of products)		100,800		1	1	2
Other (organization-sustaining costs)		61,000		NA	NA	NA
Total manufacturing overhead cost	$	507,994

Required:

1. Compute the product margins for the B300 and T500 under thecompany’s traditional costing system.

2. Compute the product margins for B300 and T500 under theactivity-based costing system.

3. Prepare a quantitative comparison of the traditional andactivity-based cost assignments.

Compute the product margins for the B300 and T500 under thecompany’s traditional costing system. (Round your intermediatecalculations to 2 decimal places and final answers to the nearestwhole dollar amount.)

	B300 T500 Total Product margin $0

Compute the product margins for B300 and T500 under theactivity-based costing system. (Negative product margins should beindicated by a minus sign. Round your intermediate calculations to2 decimal places.)

	B300 T500 Total Product margin $0

Prepare a quantitative comparison of the traditional andactivity-based cost assignments. (Round your intermediatecalculations to 2 decimal places and "Percentage" answers to 1decimal place and and other answers to the nearest whole dollaramounts.)

B300 T500 Total % of % of Amount Amount Amount Traditional Cost System Direct materials % % Direct labor % % Manufacturing overhead % % Total cost assigned to products $0 $0 $0 Selling and administrative Total cost $0 B300 T500 Total % of % of Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs: Direct materials % % Direct labor % % % % Indirect costs: Machining % % Setups % % Product sustaining % % Total cost assigned to products $0 $0 0 Costs not assigned to products: Other Selling and administrative Total cost $0