Problem 7-16 Comparing Traditional and Activity-Based Product Margins [LO7-1, L07-3, LO7-4, LO7-5) Hi-Tek Manufacturing, Inc., makes two types of industrial component parts-the B300 and the T500. An absorption costing income statement for the most recent period is shown: 02.05:15 Hi-Tek Manufacturing Inc. Income Statement Sales Coat of goods sold Gross margin Selling and administrative expenses Net operating loss $ 1,714,000 1, 229, 829 484,171 620,000 $ (135.829) Book Print rences Hi-Tek produced and sold 60,500 units of B300 at a price of $20 per unit and 12,600 units of T500 at a price of $40 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: 1300 1500 Direct materials $ 400,300 $1625 800 5 563, 100 Direct labor $ 120,200 $ 42,600 162,800 Manufacturing overhead 503,929 cost of goods sold $1,229,829 Total The company has created an activity based costing system to evaluate the profitability of its products. Hi-Teks ABC implementation team concluded that $56,000 and $102,000 of the company's advertising expenses could be directly traced to 8300 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: 3 Activity Cost Pools and activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining number of products) other organization-sustaining costs) Total manufacturing overhead cost Manufacturing Overhead $ 200,299 142,330 100,400 50,900 $ 503,929 Activity 5300 T500 Total 90,900 62,000 152,900 71 260 331 1 1 2 NA NA NA nts 3 03.0457 Required: 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. eBook Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 References Compute the product margins for the B300 and T500 under the company's traditional costing system. (Round your Intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) B300 T500 Total Product margin Required 2 > I 3. Prepared qu Son of the traditional and activity-based cost assignments. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 rences Compute the product margins for B300 and T500 under the activity-based costing system. (Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.) B300 T500 Total Product margin W MacBook Pro * 80 F3 DOO DOO F5 F 97 $ % 3 Required 1 Required 2 Required 3 10 points Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculation to 2 decimal places and "Percentage" answers to 1 decimal place and and other answers to the nearest whole dollar amounts) 08:04 B300 T500 Total of sot Traditional Cost System Amount Amount Act elook % X % Print Total cost assigned to products % Totalt References B300 T500 Total Amount Total Amount Amount Total Amount Activity-Based Costing System Direct costs % X Indirect costs % ME Hall CA MacBook Pro % of % of Amount Amount Amount Traditional Cost System % % % % % 34:32 Total cost assigned to products Total cost Total 8300 BOK % of T500 % of Total Amount Amount Amount Total Amount Amount int Activity-Based Costing System Direct costs: a % tences % % % % indirect costs: % % 9 % % Total cost assigned to products Costs not assigned to products: Total cost