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 $ 1,716,000 Cost of goods sold 1,209,265 Gross margin 506,735 Selling and administrative expenses 630,000 Net operating loss $ (123,265) Hi-Tek produced and sold 60,400 units of B300 at a price of $20 per unit and 12,700 units 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: B300 $ 400,200 $ 120, 300 T500 $ 162,400 $ 42,000 Direct materials Direct labor Manufacturing overhead Cost of goods sold Total $ 562,600 162,300 484,365 $ 1,209,265 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 $110,000 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 $ 201,085 121,380 101,400 60,500 $ 484,365 B300 90,900 79 1 NA Activity T500 62,600 210 1 NA Total 153,500 289 2 NA Required: 1. Compute the product margins for the B300 and T500 under the company's traditional costing system. 2. Compute the product margins for B300 and T500 under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments