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. $ 1,695,500 1,245,280 450,220 590,000 $ (139,780) Hi-Tek produced and sold 60,400 units of 8300 at a price of $20 per unit and 12,500 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: Total Direct materials Direct labor Manufacturing overhead Cost of goods sold 8300 $ 400,400 T500 $ 120,400 $ 162,600 $ 42,200 $ 563,000 162,600 519,680 ces $ 1,245,280 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 $101,000 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) De Other (organization-sustaining costs) Total manufacturing overhead cost Manufacturing Overhead $ 199,030 159,750 D300 Activity T500 90,800 62,300 75 100,000 1 280 1 Total 153, 100 355 2 60,100 NA NA NA $519,680