HiTek Manufacturing, Incorporated, 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 Incorporated Income Statement Sales $ 1,?5?,?66 Cost of goods sold 1,23?,691 Gross margin 526,666 Selling and administrative expenses 516,666 Net operating loss $ (89,391) HiTek produced and sold 60,300 units of B300 at a price of $21 per unit and 12,600 units ofT50'0 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: 5366 T566 Total Direct materials $ 466,466 $ 152,866 $ 553,266 Direct labor at 129,199 5 42,466 152,599 Manufacturing overhead 511,361 Cost of goods sold $ 1,237,691 The company has created an activitybased costing system to evaluate the protability of its products. HiTek's ABC implementation team concluded that $56000 and $110,000 ofthe company's advertising expenses could be directly traced to 3300 and T500, respectively. The remainder ofthe 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 3366 T566 Total Machining (machine-hours) $ 266,561 96,266 62,966 153,166 Setups (setup hours) 143,836 ?3 296 353 Productsustaining (number of products) 161,266 1 1 2 Other (organizationsustaining costs} 56,866 NA NA NA Total manufacturing overhead cost 5 511:391 Required: 1. Compute the product margins for the 3300 and T500 under the company's traditional costing system. 2. Compute the product margins for 6300 and T500 under the activitybased costing system. 3. Prepare a quantitative comparison ofthe traditional and activitybased cost assignments