Hi-Tek Manufacturing, Incorporated, 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 Incorporated Income Statement Sales 5 1,637,100 Cost of goods sold 1,208,474 Gross margin 428,626 Selling and administrative expenses 610,000 Net operating loss 5 (181,374) HiTek produced and sold 60,300 units of B300 at a price of $19 per unit and 12,600 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 bases Additional information relating to the company's two product lines is shown below: B300 T500 Total Direct materials 5 400,900 $ 162,000 $ 562,900 Direct labor 5 120,600 $ 42,500 163,100 Manufacturing overhead 482,474 Cost of goods sold $ 1,208,474 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $55,000 and $108,000 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: Manufacturing w activity Cost Pool (and Activity Measure) Overhead B300 T500 Total Machining (machine-hours) $ 201,564 90,300 62,400 152,700 Setups (setup hours) 119,110 77 200 277 Product-sustaining (number of products) 101,600 1 1 2 other (organization-sustaining costs) 60,200 NA NA NA Total manufacturing overhead cost $ 482,474 Required 1 Required 2 Required 3 Compute the product margins for B300 and T500 under the activity-based costing system. (Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.) B300 T500 Total Product margin $ 366,094 366,094Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place and and other answers to the nearest whole dollar amounts.) Traditional Cost System Direct materials 6 400,900 0 162,000 0 562,900 0 Direct labor 120,600 0 42,500 0 163,100 0 Manufacturing overhead 356,753 0 125,721 0 432,474 0 Total cost assigned to products $ 878,253 330,221 1,208,474 Selling and administrative 610.000 0 Total cost 1 18,474 Activity-Based Costing System Direct costs: Direct materials 0 $ 400,900 0 71.2 0 162,000 0 28.8 0 562,900 0 Direct labor 0 120,600 9 73.9 0 42,500 0 26.1 0 163,100 0 Advertising expense 0 55,000 9 33.7 0 108,000 0 66.3 0 163,000 0 Total Total Amount Amount Amount Amount Activity-Based Costing System Direct costs: Direct materials V $ 400,900 V 71.2 V $ 162,000 V 28.8 V $ 562,900 Direct labor V 120,600 V 73.9 V 42,500 V 26.1 V 163, 100 Advertising expense 55,000 V 33.7 108,000 V 66.3 V 163,000 Indirect costs: Machining 119, 196 V 201,564 Setups V 33, 110 V 119, 110 V Product sustaining 50,800 V 101,600 Total cost assigned to products $ 779,606 $ 312,500 1,311,274 Costs not assigned to products: Selling and administrative 447,000 Other 60,200 Total cost $ 1,818,474