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 , 712, 000 Cost of goods sold 1 , 207 , 709 GROSS margin* 504 , 291 Selling and administrative expenses 550 , 000 Not operating loss 5 (45 , 7091 Hi - Tek produced and sold 60,000 units of $.300 at a price of $20 per unit and 12 , 800 units of 7500 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 labor dollars as the allocation base . Additional information relating to the company's two product lines is shown below : $300 1500 Total Direct materials $. 400 , 600 $. 162 , 700 S 563, 300 Direct labor* $ 121 , 000 $ 42 , 500 163 , 500 Manufacturing overhead $80 , 909 Cost of goods sold $ 1 , 207 , 705The company has created an activity - based costing system to evaluate the profitability of its products . Hi - Tek's ABC implementation team concluded that $51, 000 and $107, 000 of the company's advertising expenses could be directly traced to $.300 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 : Manufacturing Activity Activity Cost Pool ( and Activity Measure ) Overhead $300 1500 Total Machining ( machine - hours ! $ 200 , 295 90 , 700` 62 , 200 152 , 900 Setups ( setup hours ! 119 , 310 71 220 291 Product - sustaining ( number of products ) 100 , 100 1 other ( organization - sustaining costs ) 60 , 900 NA NA NA Total manufacturing overhead cost $ 480 . 909$.3.0 0 T500 Total `/} Of }/{ Of Amount Amount Amount Traditional Cost System Total cost assigned to products Total cost$.3.00 1500 Total `/6 Of `/} Of Amount Total Amount Amount Total Amount Amount Activity - Based Costing System Direct costs " Indirect costs ! Total cost assigned to products Costs not assigned to products ! Total cost