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 Cost of goods sola Gross margin Selling and administrative expenses Net operating loss $1,697,300 1,252,555 444,745 570,000 $ (125,255) Hi-Tek produced and sold 60,100 units of 8300 at a price of $20 per unit and 12,700 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: B300 T500 Total Direct materials Direct labor $120,400 $ 43,000 Manufacturing overhead Cost of goods sold $400,400 $162,300 $ 562,700 163,400 526,455 $1,252,555 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 $108,000 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 Activit 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 158,670 100,400 60,700 B300 T500 Total $206,685 90,900 62,200 153,100 369 79 290 NA NA NA $526,455 Required: 1. Compute the product margins for the B300 and T500 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 cost assignments