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	$ 1,697,400
Cost of goods sold	1,212,332
Gross margin	485,068
Selling and administrative expenses	640,000
Net operating loss	$ (154,932)

Hi-Tek produced and sold 60,300 units of B300 at a price of $20 per unit and 12,600 units of T500 at a price of $39 per unit. The companys 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 companys two product lines is shown below:

	B300	T500	Total
Direct materials	$ 400,700	$ 162,400	$ 563,100
Direct labor	$ 120,100	$ 42,400	162,500
Manufacturing overhead			486,732
Cost of goods sold			$ 1,212,332

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Teks ABC implementation team concluded that $56,000 and $109,000 of the companys 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 companys manufacturing overhead to four activities as shown below:

Activity Cost Pool (and Activity Measure)	Manufacturing Overhead	Activity
		B300	T500	Total
Machining (machine-hours)	$ 202,752	90,800	62,800	153,600
Setups (setup hours)	122,180	78	220	298
Product-sustaining (number of products)	101,000	1	1	2
Other (organization-sustaining costs)	60,800	NA	NA	NA
Total manufacturing overhead cost	$ 486,732

Required:

Compute the product margins for the B300 and T500 under the companys traditional costing system.

Compute the product margins for B300 and T500 under the activity-based costing system.

Prepare a quantitative comparison of the traditional and activity-based cost assignments.