Hi-Tek Manufacturing, Incorporated, 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 Incorporated Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss $ 1,780,400 1,217,792 562,608 610,000 $ (47,392) Hi-Tek produced and sold 60,400 units of 8300 at a price of $21 per unit and 12,800 units of T500 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: Direct materials Direct labor Manufacturing overhead Cost of goods sold 8300 7500 $ 400,200 $162,900 $120,600 $ 42,500 Total $ 563,100 163,100 491,592 $ 1,217,792 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC Implementation team concluded that $58,000 and $104,000 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. Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost Manufacturing Overhead 8300 $205,422 90,900 125,870 77 100,200 1 Activity 7500 62,400 230 1 Total 153,300 307 2 60,100 NA NA 5491,592 Traditional Cost System Amount B300 % of Amount T500 % of Total Amount Direct materials 400,200 $ 162,900 S 563,100 Direct labor 120,600 42,500 163,100 Manufacturing overhead 363,006 127,925 490,931 Total cost assigned to products S 883,806 $ 333,325 $ 1,217,131 Selling and administrative 448,000 Total cost $ 1,665,131 Activity-Based Costing System Direct costs: Direct materials Direct labor Advertising expense Indirect costs: Machining Setups Amount B300 T500 % of Total Amount Amount % of Total Amount Total Amount 400,200 71.1 S 162,900 28.9 S 563,100 120,600 73.9 42,500 26.1 163,100 58,000 35.8 104,000 64.2 162,000 121,806 59.3 83,616 40.7 205,422 31,570 25.1 94,300 74.9 125,870 487,316 1,219,492 Total cost assigned to products S 732,176 Costs not assigned to products: Selling and administrative Other Total cost 448,000 60,100 $ 1,727,592