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: Hi-Tek Manufacturing Inc. Income Statement $ 2,100,000 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss 1,600,000 500,000 550,000 (50,000) Hi-Tek produced and sold 70,000 units of 8300 at a price of $20 per unit and 17,500 units of T500 at a price of $40 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labour dollars as the allocation base. Additional information relating to the company's two product lines is shown below: 8300 T500 Direct materials Direct labour Manufacturing overhead Cost of goods sold 436,300 $ 251,700 $ 200,000 $ 104,000 Total $ 688,000 304,000 608,000 $ 1,600,000 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $50,000 and $100,000 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. 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 $ 213,500 157,500 120,000 117,000 $ 608,000 Activity 8300 90,000 T500 62,500 Total 152,500 75 300 375 1 1 2 NA NA NA