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 $103,000 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 (machinehours) $ 205.824 90.900 62.700 153,600 Setups (setup hours) 152,240 76 270 346 Productsustaining (number of products) 101,600 1 1 2 Other (organizationsustaining costs) 60.100 NA NA NA Total. manufacturing overhead cost $ 519.154 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. 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: HiTek Manufacturing Incorporated Income Statement Sales $ 1,706,000 Cost of goods sold 1.244.554 Gross margin 461,436 Selling and administrative expenses 560,000 Net operating loss $ (98.564) Hi-Tek produced and sold 60,300 units of 3300 at a price of $20 per unit and 12,500 units of 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 T500 Total Direct materials $ 400,200 $ 162.500 $ 562,700 Direct labor $ 120,300 $ 42,400 162,700 Manufacturing overhead 519.164 Cost of goods sold $ 1.244.554 The company has created an activitybased costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $56,000 and $103,000 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