Hi Tek Manufacturing Inc. makes two types of industrial component parts-the B300 and the T500. An absorption costing income statement for the most recent period is shown below: -Tek Manufacturing Inc. Income Statement 2,100,000 Sales Cost of goods sold 1.000.000 Gross margin 500,000 Selling and administrative expenses 550.000 Net operating loss (50,000) HiTek produced and sold 70,000 units of B300 at a price of $20 per unit and 17,500 units of T500 at a price of S40 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 S 433,300 $251,700 S 688,000 Direct labor S200,000 S 104,000 304.000 Manufacturing overhead 608,000 S 1,600,000 Cost of goods sold The company has created an activity-based costing system to evaluate the profitability of its products. Tek's ABC implementation team concluded that S50,000 and S100,000 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 to four activities as shown below: Activity Manufacturi Activity Cost Pool (and Activity Measure) Overhead B300 T500 Total Machining (machine-hours) $213,500 90,000 62,500 152,500 Setups (setup hours) 157,500 75 300 375 Product-sustaining (number of products) 120,000 Other (organization-sustaining costs) 117,000 Total manufacturing overhead cost $608,000