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HiTek Manufacturing, Inc_, makes two types of industrial component partsthe 8300 and the T500. An absorption costing income statement for the most recent period is

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HiTek Manufacturing, Inc_, makes two types of industrial component partsthe 8300 and the T500. An absorption costing income statement for the most recent period is shown: HiTek Manufacturing Inc. Income Statement Sales 5 1,633,300 Cost of goods sold 1,207,885 Gross margin 425,415 Selling and administrative expenses 650,000 Net operating loss $ (224,585) HiTek produced and sold 60,100 units of 8300 at a price of $19 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 companfs two product lines is shown below: 5300 T500 Total Direct materials $401,000 $ 162,100 $ 563,100 Direct labor $120,700 $ 42,500 163,200 Manufacturing overhead 481, 585 Cost of goods sold $1,207,885 The company has created an activitybased costing system to evaluate the protability of its products. HiTek's ABC implementation team concluded that $59,000 and $102,000 of the company's advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses was organizationsustaining 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 (machinehours] $ 204,155 90,900 62,600 153,500 Setups (setup hours] 116,530 71 200 271 Productsustaining (number of products:- 100,600 1 1 2 Other (organizationsustaining costs) 60,300 NA NA NA Total manufacturing overhead cost $ 431.535

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