Hi-Tek Manufacturing, Inc., makes two types of industrial component partsthe B300 and the T500. An absorption costing income statement for the most recent period is shown: Hi-Tek Manufacturing Inc. Income Statement Sales $ 1,701,300 Cost of goods sold 1,240,426 Gross margin 460,874 Selling and administrative expenses 560,000 Net operating loss $ (99,126 ) Hi-Tek produced and sold 60,300 units of B300 at a price of $20 per unit and 12,700 units of T500 at a price of $39 per unit. The companys 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 companys two product lines is shown below: B300 T500 Total Direct materials $ 400,900 $ 162,200 $ 563,100 Direct labor $ 120,900 $ 42,900 163,800 Manufacturing overhead 513,526 Cost of goods sold $ 1,240,426 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Teks ABC implementation team concluded that $59,000 and $105,000 of the companys 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 companys manufacturing overhead to four activities as shown below: Manufacturing Overhead Activity Activity Cost Pool (and Activity Measure) B300 T500 Total Machining (machine-hours) $ 208,896 90,700 62,900 153,600 Setups (setup hours) 142,330 71 260 331 Product-sustaining (number of products) 101,800 1 1 2 Other (organization-sustaining costs) 60,500 NA NA NA Total manufacturing overhead cost $ 513,526