income statement for the most recent period is shown: Hi-Tek Manufacturing Incorporated Income Statement Sales $ 1, 697, 300 Cost of goods sold 1, 238, 786 Gross margin 458, 514 Selling and administrative expenses 560, 000 Net operating loss $ (101, 486) Hi-Tek produced and sold 60,100 units of B300 at a price of $20 per unit and 12,700 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: B300 T500 Total Direct materials $ 401, 090 $ 162, 700 $ 563,700 Direct labor $ 120, 400 $ 42,400 162, 800 Manufacturing overhead 512, 286 Cost of goods sold $ 1, 238, 786 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $52,000 and $109,000 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 Activity Activity Cost Pool (and Activity Measure) Overhead B300 T500 Total Machining (machine-hours) $ 209,336 90, 500 62, 300 152, 800 Setups ( setup hours) 141, 750 75 240 315 Product- sustaining (number of products) 101, 600 1 1 2 Other (organization-sustaining costs) 60, 200 NA NA NA Total manufacturing overhead cost $ 512, 286 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