Sales Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts-the B300 and the T500. An absorption costing income statement for the most recent period is shown: Hi-Tek Manufacturing Incorporated Income Statement $ 1,759,200 Cost of goods sold 1, 239, 240 Gross margin 519,960 Selling and administrative expenses 650,000 Net operating loss $ (130,040) Hi-Tek produced and sold 60,000 units of B300 at a price of $21 per unit and 12,800 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 $ 400,600 $ 120,800 7500 $ 162,500 $ 42,400 Direct materials Direct labor Manufacturing overhead Cost of goods sold Total $ 563, 100 163,200 512,940 $ 1,239,240 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $50,000 and $107,000 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 3300 7500 Total Machining (machine-hours) $ 214,200 90,500 62,500 153,000 Setups (setup hours) 136,740 78 240 318 Product-sustaining (number of products) 101,200 1 1 2 other organization-sustaining conta) 60,800 NA NA NA . Total manufacturing overhead cost $ 512,940 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