Hi-Tek Manufacturing Inc. Income Statement SALES COST OF GOODS SOLD GROSS MARGIN SELLING AND AMINISTRATIVE EXPENSES NET OPERATING LOSS 1,764,200.00 1,258,505.00 505,695.00 610,000.00 (104,305.00) B300 TOTAL T500 60200 21.00 $ UNITS PRODUCED UNIT PRICE 72700 12500 40.00 400,200.00 120,700.00 $ $ DIRECT MATERIALS DIRECT LABOR GOGS 162,400.00 $ 562,600.00 42,500.00 $ 163,200.00 $532,705.00 $ 1,258,505.00 MOH ACTIVITY T500 B300 90200 TOTAL 62900 300 153100 373 ACTIVITY COST POOL AND ACTIVITY MEASURE MACHINING (MACHINE HOURS) SETUPS (SETPU HOURS) PRODUCT SUSTAINING (NUMBER PR PRODUCTS) OTHER (ORGANIZATION SUSTAINGING COSTS) TOTAL MOH 206,685.00 164,120.00 101,600.00 60,300.00 532,705.00 54000 110000 164000 ADVERTISING EXPENSE SELLING AND ADMIN ACTVITY RATE 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 $110,000 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 overhead to four activities as shown below: COMPUTE PRODUCT MARGINS FOR R300 AND 1500 UNDER THE COMPANY'S TRADITIONAL COSTING SYSTEM