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	$1,697,400
Cost of Goods Sold	$1,207,272
Gross Margin	$490,128
Selling and Admin. Expenses	$640,000
Net Operating Loss	$(149,872)

Hi-Tek produced and sold 60,300 units of B300 at a price of $20 per unit and 12,600 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	$400,300	$162,300	$562,600
Direct Labor	$120,100	$42,100	$162,200
Manufacturing Overhead			$482,472
Cost of Goods Sold			$1,207,272

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Teks ABC implementation team concluded that $58,000 and $103,000 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:

Activity Cost Pool (and Activity Measure)	Manufacturing Overhead	Activity B300	Activity T500	Total
Total Machining (machine-hours)	$201,432	90,200	62,400	152,600
Setups (set up hours)	120,540	74	220	294
Product-sustaining (Number of Products)	100,400	1	1	2
Other (organizing-sustaining costs)	60,100	NA	NA	NA
Total Manufacturing Overhead Costs	$482,472

Required: 1. Compute the product margins for the B300 and T500 under the companys traditional costing system. 2. Compute the product margins for B300 and T500 under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.