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: Hi-Tek Manufacturing Inc. Income Statement Sales $ 1,701,400 Cost of goods sold 1,240, 115 Gross margin 461,285 Selling and administrative expenses 590,000 Net operating loss $(128,715) Hi-Tek produced and sold 60.500 units of B300 at a price of $20 per unit and 12,600 units of T500 at a price of $39 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 B300 T500 Total $ 400,800 $ 163,000 $ 563,800 $ 120,400 $ 42,200 162,600 513,715 $1,240,115 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $55,000 and $103.000 of the company's advertising expenses could be directly traced to B300 and 1500, 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 Activity Cost Pool and Activity Measure) Hachining (machine-hours) Setups (setup hours) Product sustaining number of products other organization-sustaining costs) Total manufacturing overhead cost Manufacturing Overhead $206,415 144.800 101.800 60 200 5 513,715 Activity 300 T500 Total 90,100 2,000 152,900 72 290 362 1 1 MA TA MA Required: 1. Compute the product margins for the B300 and 1500 under the company's traditional costing system 2. Compute the product margins for B300 and T500 under the activity based costing system 3. Prepare a quantitative comparison of the traditional and activity-based cast assignments