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 1,693,400 Cost of goods sold 1,210,432 Gross margin 482,968 Selling and administrative expenses 560,000 Net operating loss (77,032) Hi-Tek produced and sold 60,100 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: B300 T500 Total Direct materials 400,100 162,700 $ 562,800 Direct labor 120,500 42,700 163,200 Manufacturing overhead 484,432 Cost of goods sold 1,210,432 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $53,000 and $105,000 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: Manufacturing Activity Activity Cost Pool (and Activity Measure) Overhead B300 T500 Total Machining (machine-hours) $ 202,092 90,500 62,600 153,100 Setups (setup hours) 120,540 74 220 294 Product-sustaining (number of products) 01,200 Other (organization-sustaining costs) 60,600 NA NA NA Total manufacturing overhead cost $ 484,432 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. option 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments