**Hi-Tek Manufacturing, Inc.**Hi-Tek Manufacturing, Inc. produces two types of industrial component parts—the B300 and the T500. Below is an absorption costing income statement for the most recent period.**Income Statement:**| | Amount ($) ||-----------------------|--------------|| **Sales** | 1,652,000 || **Cost of goods sold**| 1,241,100 || **Gross margin** | 410,900 || **Selling and administrative expenses** | 550,000 || **Net operating loss** | (139,100) |Hi-Tek produced and sold 60,000 units of B300 at a price of $19 per unit and 12,800 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 details about the company's two product lines are provided below:**Product Line Information:**| | B300 | T500 | Total ||--------------------|--------------|-------------|--------------|| **Direct materials** | $400,700 | $162,200 | $562,900 || **Direct labor** | $120,700 | $42,300 | $163,000 || **Manufacturing overhead** | | | $515,200 || **Cost of goods sold** | | | $1,241,100 |The company uses an activity-based costing (ABC) system to evaluate the profitability of its products. The ABC implementation concluded that $54,000 and $109,000 of the company's advertising expenses could be directly traced to B300 and T500, respectively. The rest of the selling and administrative expenses are organization-sustaining. The following activities and their corresponding overhead costs were identified:**Activity-Based Costing Information:**| Activity Cost Pool (and Activity Measure) | Overhead ($) | B300 | T500 | Total ||------------------------------------------------------|--------------|------|------|-------|| **Machining (machine-hours)** | 198,640 | 90,200 | 62,600 | 152,800 || **Setups (setup hours)** | 155,660 | 72

Traditional Costing is method of cost allocation of overheads in which costs are allocated using the…

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: Hi-Tek Manufacturing Inc. Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss Hi-Tek produced and sold 60,000 units of B300 at a price of $19 per unit and 12,800 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: Direct materials Direct labor Manufacturing overhead Cost of goods sold $1,652,000 1,241,100 410,900 550,000 $ (139,100) B300 T500 $ 400,700 $162,200 $ $ 120,700 $ 42,300 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $54,000 and $109,000 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: Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost Product margin Total 562,900 163,000 515,200 $1,241,100 B300 Complete this question by entering your answers in the tabs below. T500 Manufacturing Overhead $ 198,640 155,660 100, 800 60,100 $ 515,200 Required 1 Activity 8300 T500 90,200 62,600 290 72 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. 1 NA Required 1 Required 2 Required 3 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.) Total 1 NA Total 152,800 Required 2 > 362 2 NA