Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Hi - Tek Manufacturing, Incorporated, makes two types of industrial component parts the B 3 0 0 and the T 5 0 0 . An
HiTek Manufacturing, Incorporated, makes two types of industrial component partsthe B and the T An absorption costing income statement for the most recent period is shown: HiTek Manufacturing Incorporated Income Statement Sales $ Cost of goods sold Gross margin Selling and administrative expenses Net operating loss $ HiTek produced and sold units of B at a price of $ per unit and units of T at a price of $ 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: B T Total Direct materials $ $ $ Direct labor $ $ Manufacturing overhead Cost of goods sold $ The company has created an activitybased costing system to evaluate the profitability of its products. HiTeks ABC implementation team concluded that $ and $ of the companys advertising expenses could be directly traced to B and T respectively. The remainder of the selling and administrative expenses was organizationsustaining in nature. The ABC team also distributed the companys manufacturing overhead to four activities as shown below: Activity Cost Pool and Activity Measure Manufacturing Overhead Activity B T Total Machining machinehours $ Setups setup hours Productsustaining number of products Other organizationsustaining costs NA NA NA Total manufacturing overhead cost $ Required: Compute the product margins for the B and T under the companys traditional costing system. Compute the product margins for B and T under the activitybased costing system. Prepare a quantitative comparison of the traditional and activitybased cost assignments.HiTek Manufacturing, Incorporated, makes two types of industrial component partsthe B and the T An absorption costing income statement for the most recent period is shown: HiTek produced and sold units of at a price of $ per unit and units of T at a price of $ 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. The company has created an activitybased costing system to evaluate the profitability of its products. HiTek's ABC implementation team concluded that $ and $ of the company's advertising expenses could be directly traced to B and T respectively. The remainder of the selling and administrative expenses was organizationsustaining in nature. The ABC team also distributed the company's manufacturing overhead to four activities as shown below: Activity Cost Pool and Activity Measure Machining machinehours Setups setup hours Productsustaining number of products other organizationsustaining costs Total manufacturing overhead cost Required: Compute the product margins for the B and T under the company's traditional costing system. Compute the product margins for B and T under the activitybased costing system. Prepare a quantitative comparison of the traditional and activitybased cost assignments. Complete this question by entering your answers in the tabs below. Prepare a quantitative comparison of the traditional and activitybased cost assignments. Round your intermediate calculations to decimal places and "Percentage" answers to decimal place.
HiTek Manufacturing, Incorporated, makes two types of industrial component partsthe B and the T An absorption costing income statement for the most recent period is shown:
HiTek Manufacturing Incorporated
Income Statement
Sales $
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating loss $
HiTek produced and sold units of B at a price of $ per unit and units of T at a price of $ 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:
B T Total
Direct materials $ $ $
Direct labor $ $
Manufacturing overhead
Cost of goods sold $
The company has created an activitybased costing system to evaluate the profitability of its products. HiTeks ABC implementation team concluded that $ and $ of the companys advertising expenses could be directly traced to B and T respectively. The remainder of the selling and administrative expenses was organizationsustaining in nature. The ABC team also distributed the companys manufacturing overhead to four activities as shown below:
Activity Cost Pool and Activity Measure Manufacturing Overhead Activity
B T Total
Machining machinehours $
Setups setup hours
Productsustaining number of products
Other organizationsustaining costs NA NA NA
Total manufacturing overhead cost $
Required:
Compute the product margins for the B and T under the companys traditional costing system.
Compute the product margins for B and T under the activitybased costing system.
Prepare a quantitative comparison of the traditional and activitybased cost assignments.HiTek Manufacturing, Incorporated, makes two types of industrial component partsthe B and the T An absorption costing
income statement for the most recent period is shown:
HiTek produced and sold units of at a price of $ per unit and units of T at a price of $ 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.
The company has created an activitybased costing system to evaluate the profitability of its products. HiTek's ABC implementation
team concluded that $ and $ of the company's advertising expenses could be directly traced to B and T
respectively. The remainder of the selling and administrative expenses was organizationsustaining in nature. The ABC team also
distributed the company's manufacturing overhead to four activities as shown below:
Activity Cost Pool and Activity Measure
Machining machinehours
Setups setup hours
Productsustaining number of products
other organizationsustaining costs
Total manufacturing overhead cost
Required:
Compute the product margins for the B and T under the company's traditional costing system.
Compute the product margins for B and T under the activitybased costing system.
Prepare a quantitative comparison of the traditional and activitybased cost assignments.
Complete this question by entering your answers in the tabs below.
Prepare a quantitative comparison of the traditional and activitybased cost assignments. Round your intermediate calculations to
decimal places and "Percentage" answers to decimal place.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started