3) Hi-Tek Manufacturing, Inc., makes two types of industrial component partsthe B300 and the T500. An absorption costing income statement for the most recent period is shown:

Hi-Tek Manufacturing INC

Income Statement

Sales	1,708,000
Cost of goods sold	1,226,810
Gross margin	481,190
Selling and administrative expenses	630,000
Net operating loss	(148,810)

Hi-Tek produced and sold 60,200 units of B300 at a price of $20 per unit and 12,600 units of T500 at a price of $40 per unit. The companys 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 companys two product lines is shown below:

Activity Cost Pool (and Activity Measure)	Manufacturing Overhead	B300	T500	Total
Machining (machine-hours)	$198,900	90,500	62,500	153,000
Setups (setup hours)	139,810	71	270	341
Product-sustaining (number of products)	101,800	1	1	2
Other (organization-sustaining costs)	60,400	NA	NA	NA
Total manufacturing overhead cost	$500,910

Required:

1. Compute the product margins for the B300 and T500 under the companys 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.