Hi-Tek Manufacturing Inc makes two types of industrial component parts-the 5300 and the T500. An absorption costing income statement for the most recent period is shown below:

Hi - Tek produced and sold 60.500 units of 8300 at a price of 520 per unit and 12.500 units of T500 at a price of 539 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:

The company has created an activity-based costing system to evaluate the profitability of its products Hi-Tek's ABC implementation team concluded that 552 000 and 5102 000 of the company's advertising expenses could be directly traced to 5300 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.
The company has created an activity-based costing system to evaluate the profitability of its products Hi-Tek's ABC implementation team concluded that 552,000 and 5102,000 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:

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 T500 under the activity-based costing system.
3) Prepare a quantitative comparison of the traditional and activity-based cost assignments.

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Hi-Tek Manufacturing Inc Income Statement Sales Cost of goods sold $1,697,500 1,215,597 Gross margin Selling and administrative expenses590,000 481,903 Net operating loss (108,097) В 300 T500 Total Direct materials Direct labor Manufacturing overhead S 400,500 162,000 $ 562,500 162,500 490,597 S120,000 42,500 Cost of goods sold 1,215,597 Activity Manufacturing B300 Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Overhead $ 201,347 126,850 101.800 60,600 T500 Total 90,700 63,000 153,700 295 75 220 NA NA NA Total manufacturing overhead cost $ 490,597