Hi$-$Tek Manufacturing, Inc., makes two types of industrial component parts$$the B$300$ and the T$500.$ An absorption costing income statement for the most recent period is shown:

Hi$-$Tek Manufacturing Inc.

Income Statement

Sales $ $1,718,000$

Cost of goods sold $1,235,930$

Gross margin $482,070$

Selling and administrative expenses $600,000$

Net operating loss $ $(117,930)$

Hi$-$Tek produced and sold $60,500$ units of B$300$ at a price of $$20$ per unit and $12,700$ units of T$500$ at a price of $$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:

B$300$ T$500$ Total

Direct materials $ $400,300$ $ $162,600$ $ $562,900$

Direct labor $ $120,500$ $ $42,700163,200$

Manufacturing overhead $509,830$

Cost of goods sold $ $1,235,930$

The company has created an activity$-$based costing system to evaluate the profitability of its products. Hi$-$Tek$$s ABC implementation team concluded that $$53,000$ and $$108,000$ of the company$$s advertising expenses could be directly traced to B$300$ 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:

Manufacturing

Overhead Activity

Activity Cost Pool $($and Activity Measure$)$ B$300$ T$500$ Total

Machining $($machine$-$hours$)$ $ $211,83090,70062,800153,500$

Setups $($setup hours$)137,60074270344$

Product$-$sustaining $($number of products$)100,400112$

Other $($organization$-$sustaining costs$)60,000$ NA NA NA

Total manufacturing overhead cost $ $509,830$