1)Find product margin with traditional method.2) Find product margin with ABC method

Hi-Tek Manufacturing. Inc.. makes two types of industrial component partsthe 83(1) and the T500. An absorption costing income statement for the most recent period is shown: Hi-Tek Manufacturing Inc. Income Statement Sales ................................................. 52.100.000 Cost of goods sold ..................................... 1.600.000 Gross margin .......................................... 500.000 Selling and administrative expenses ..................... 550.000 Net operating loss ..................................... $ (50.000) Hi-Tek produced and sold 70.000 units ofB3v00 at a price of $20 per unit and [7.5\"] units ofTSOO at a price of $40 per unit. The company's uaditional cost system allocates manufacturing over- head 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: 8300 T500 Total Direct materials ................. $436300 5251.700 5 688.000 Direct labor .................... $200 .000 S 1 04.000 304.000 Manufacturing overhead ......... 608.000 Cost of goods sold .............. $1,600,000 The company has created an activity-based costing system to evaluate the protability of its prod- ucts. Hi-Tek's ABC implementation team concluded that $50.(I]0 and $l00.000 of the company's advertising expenses could be directly traced to 33(1) 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: Manufacturing AliW Activity Cost Pool (and Activity Measure) Overhead 3300 T500 Total Machining (machine-hou rs) ................. 5213.500 90.000 62.500 152.500 Setups [setup hours) ...................... 157.500 75 300 37 5 Product-sustaining {number of products) ....... 120.000 1 1 2 Other (organization-sustaining costs) ........ 1 17.000 NA NA NA Total manufacturing overhead cost .......... 5608.000