1 income statement for the most recent period is shown: Hi-Tek Manufacturing Incorporated Income Statement Sales Cost of goods sold Gross margin $ 1,699,400 1,229,030 470,370 650,000 Selling and administrative expenses Net operating loss $ (179,630) Hi-Tek produced and sold 60,400 units of 8300 at a price of $20 per unit and 12,600 units of T500 at a price of $39 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: 8300 1500 Total Direct materials Direct labor $ 400,800 $ 162,600 $ 120,100 $ 42,100 $ 563,400 Manufacturing overhead 162,200 503,430 Cost of goods sold $ 1,229,030 nices 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 $105,000 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 Cost Pool (and Activity Measure). Manufacturing Overhead Machining (eachine-hours) Setups (setup Activity 1500 62,300 8300 90,700 Total 153,000 hours) 75 $ 208,080 133,250 101,400 60,700 Product-sustaining (number of products) 250 325 1 1 2 Other (organization-sustaining costs) NA NA NA Total manufacturing overhead cost $ 503,430 Required: 1. Compute the product margins for the 8300 and T500 under the company's traditional costing system. 2. Compute the product margins for 8300 and T500 under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments