: 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 $106,000 of the company's advertising expenses could be directly traced to 8300 and T 500, 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: Hi-Tek Manufacturing, Inc., makes two types of industrial component partsthe 8300 and the T500. An absorption costing income statement for the most recent period is shown: Hi-Tek Manufacturing Inc. 464, 260 62e, eee 2e6, 280 147 , ese lel, see 515, 840 Income Cost of goods sold Gross margin Selling and administrative Net operating loss Statement expenses $ 1, 7e6,eee 1, 241, 740 $ (155, 740) Hi-Tek produced and sold 60,100 units of 8300 at a price of $20 per unit and 12,600 units of T 500 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 B3ee $ 4ee, 9ee $ 12e,1ee T5ee 162, eee $ 42, 9ee Total 562, 9ee 163, eee 515, 840 $ 1,241, 740 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 Manufacturing Overhead se, 9ee B3ee se, 7ee 72 1 Activity Total T5ee 62, lee 152, 8ee 27e 1 342 2