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Hi-Tek Manufacturing Inc. makes two types of industrial component partsthe B300 and the T500. An absorption costing income statement for the most recent period is shown below:

Hi-Tek Manufacturing Inc. Income Statement
Sales	$	1,759,500
Cost of goods sold		1,238,320
Gross margin		521,180
Selling and administrative expenses		590,000
Net operating loss	$	(68,820)

Hi-Tek produced and sold 60,200 units of B300 at a price of $21 per unit and 12,700 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	$	400,900	$	163,000	$	563,900
Direct labor	$	120,700	$	42,100		162,800
Manufacturing overhead						511,620
Cost of goods sold					$	1,238,320

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Teks ABC implementation team concluded that $53,000 and $106,000 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:

	Manufacturing		Activity
Activity Cost Pool (and Activity Measure)	Overhead		B300	T500	Total
Machining (machine-hours)	$	214,340	90,300	62,800	153,100
Setups (setup hours)		137,280	72	240	312
Product-sustaining (number of products)		100,000	1	1	2
Other (organization-sustaining costs)		60,000	NA	NA	NA
Total manufacturing overhead cost	$	511,620
1. 1. Compute the product margins for the B300 and T500 under the companys traditional costing system. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole dollars.) 2. Compute the product margins for B300 and T500 under the activity-based costing system. (Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.) My biggest issue with this is I'm not entirely sure where they're getting the numbers from for Manufacturing overhead. Is there anyway you could help me with the problem and explain where the numbers come from for overhead? Thank you!

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