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Hi$-$Tek Manufacturing, Incorporated, makes two industrial component parts$-$B$300$ and T$500.$ An absorption costing income statement for the most recent period is shown below:

$6\mathrm{.}68$ points

The company created an activity$-$based costing system to evaluate the profitability of its products. Hi$-$Tek's ABC implementation team concluded that $$57,000$ and $$108,000$ of the company's advertising expenses could be directly traced to B$300$ and T$500,$ 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:

$\backslash$table$[[$Activity Cost Pool $($and Activity Measure$),$Manufacturing,,Activity,$],[$Machining $($machine$-$hours$),$Overhead,B$300,$T$500,$Total$],[$Setups $($setup hours$),$$$213,360,90,100,62,300,152,400],[$Product$-$sustaining $($number of products$),\backslash$table$[[145,200],[100,600]],70,260,330],[$Other $($organization$-$sustaining costs$),1.)$

$\backslash$table$[[100,600],[60,600]],1$

$2,1,2],[$Total manufacturing overhead cost,$$519,760,,,]]$

Required:

Compute the product margins for $B300$ and $T500$ under the company's traditional costing system.

Compute the product margins for B$300$ and T$500$ under the activity$-$based costing system.

Prepare a quantitative comparison of the traditional and activity$-$based cost assignments.

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