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Hi-Tek Manufacturing, Inc., makes two types of industrial component parts-the 3300 and the T500. An absorption costing income statement for the most recent period is shown: Wiek Manufacturing Inc. Income Statement Sales $1,699, 300 Cost of goods sold 1,211.658 Cross margin 487,642 Selling and administrative 610.000 expenses Net operating loss $ (122358) Hi-Tek produced and sold 60,200 units of B300 at a price of $20 per unit and 12,700 units of T500 at a price of $39 p 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 linesi shown below: B300 1500 $400,700 $162,900 $ $120,900 $ 42,700 Direct materials Direct labor Manufacturing overhead Cost of goods sold Total 563, 600 163,600 484,459 $1,211, 658 The company has created an activity based costing system to evaluate the profitability of its products HI-Tek's ABC implementation team concluded that $60,000 and $101.000 of the company's advertising expenses could be directly traced to B300 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 Activity Cost Pool and Manufacturing Activity Measure) Overhead B300 T500 Total Machining machine-hours) $ 202,958 90,400 62,200 152,600 Setups (setup hours) 119,700 75 210 285 Product-sustaining (number of 101,800 products) Other organization- 60,000 NA NA NA sustaining costs) Total manufacturing overhead 4 84.458 cost Required: 1. Compute the product margins for the B300 and 1500 under the company's 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

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