Problem 7-16 Comparing Traditional and Activity-Based Product Margins L07-1, LO7-3, L07-4. LO7-5] Hi-Tek Manufacturing Inc. makes two types of industrial component parts- the B300 and the T500. An absorption costing income statement for the most recent period is shown below: Hi-Tek Manufacturing Inc. Income Statement s1,635.200 1,208,553 Sales Cost of goods sold Gross margin 426,647 640,000 $(213,353) Selling and administrative expenses Net operating loss Hi-Tek produced and sold 60,200 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 base. Additional information relating to the company's two product lines is shown below: Total 8300 T500 400,100 162,300 s 562.400 $42,800 163,800 482,353 s1.208,553 Direct materials 121,000 Direct labor overhead Cost of goods sold The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $56,000 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 team also distributed the company's manufacturing overhead to four activities as shown below g in nature. The ABC