Absorption costing Income Statement is the following: Sales $1,664,000, COGS $1,217,550, Gross Margin $427,250, Selling and Admin costs $560,000, Net operating loss -$132,750. Produce and sell two types of units. Produced and sold 60,500 units of unit 1 at price of $19/unit and 12,700 of unit 2 at $39/unit. The company allocates manufacturing overhead to products using plant wide overhead rate and uses direct labor as allocation base. Direct materials unit 1 $400,900, unit 2 $163,000. Direct labor unit 1 $120,000 and unit 2 $42,600. The company has created an activity based costing system. $54,000 for advertising for unit 1 and $104,000 advertising for unit 2. All other expenses were organizational sustaining in nature. Distributed manufacturing overhead into the following four activities: Machinig: manufacturing overhead $203,000. Activity for unit 1 90,300 and for unit 2 is 62,700. Setups (set up hours) $125,160. Activity unit 1 78 and for unit 2 220. Product-sustaining (number of products) 101,600. Activity unit 1 is 1 and unit 2 is also 1. Other organizational sustaining costs are $60,700. 1) Compute the product margin for unit one and unit two under the companies traditional costing system.

2) Compute the product margins for unit one and unit two under the activity based costing system.

3)