HiTek Manufacturing, Inc., makes two types ofindustrial component partsthe B300 and the T500. An absorption costing income statement for the most recent period is shown: HiTek Manufacturing Inc. Income Statement Sales s 1353,5439: Cost of goods sold 1,222,108 Gross margin 531,392 Selling and administrative expenses 549:999 Met operating loss 5 {108,008} I Hi-Tek produced and sold 00,100 units of 8300 at a price of $21 per unit and 12,000 units of T500 at a price of $30 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: 5300 T500 Total Direct materials 5 401,000 5 102,300 5 503,300 Direct labor $ 120,800 s 42,503 103,300 Manufacturing overhead 495,508 Cost of goods sold 5 1,222,108 The company has created an activitybased costing system to evaluate the protability of its products. Hi Tek's ABC implementation team concluded that $5?,000 and $103,000 of the company's advertising expenses could be directly traced to 8300 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 8300 T500 Total Machining [machine-hours} S 204,288 90,800 02,800 153,000 Setups (setup hours) 128,920 23 220 293 Productsustaining (number of products} 102,000 1 1 2 0ther (organization-sustaining costs} 69,300 NA NA NA Total manufacturing overhead cost $ 495:593 Required: 1. Compute the product margins for the B300 and T500 under the company's traditional costing system. 2. Compute the product margins for 8300 and T500 under the activitybased costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments