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Hi -Tel-( Manufacturing, Inc., makes two types of industrial component partsthe 8300 and the T500. An absorption costing income statement for the most recent period

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Hi -Tel-( Manufacturing, Inc., makes two types of industrial component partsthe 8300 and the T500. An absorption costing income statement for the most recent period is shown: Hi-Tak Hanufnuturing Inc. Imam Statement Sales 5: 1,?12,000 Cost of goods sold 1,207,?09 Gross margin 504,291 Selling and administrative expenses 550,000 Net operating loss 5: (45,709} [ Hi -Tel-( produced and sold 00,000 units of 8300 at a price of $20 per unit and 12,800 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: 3300 T500 Total Direct: materials .5: 100,500 5: 162,?00 $ 563,300 Direct labor $ 121,000 $ 42,500 163,500 Manufacturing overhead 490,909 Cost of goods sold .5: 1,207,?09 The company has created an activity - based costing system to evaluate the profitability' of its products . Hi - Tek's ABC implementation team concluded that $51, 000 and $ 107, 000 of the company's advertising expenses could be directly traced to $. 300 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 Fool (and Activity MEASURE ) Overhead $300 1500 Total Machining ( machine - hours !" $ 200 , 295 90 , 700 52 , 200 152 , 900 Setups ( setup hours !" 115 , 310 71 220 291 Product - sustaining ( number of products ! 100 , 100 1 Other ( organization - sustaining costs ) 50 , 200 NA MA NA Total manufacturing overhead cost 5 4 80 , 205$.300 1500 Total `/6 Of `/} Of Amount Amount Amount Traditional Cost System Total cost assigned to products Total cost3.3.00 1500 Total `/} Of Amount Total Amount Amount Total Amount Amount Activity - Based Casting System Direct costs ! Indirect costs* Total cost assigned to products Costs not assigned to products ! Total cost

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