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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
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: Hi-Tek Manufacturing Inc. Income Statement Sales $ 1,633,300 Cost of goods sold 1,262,500 Gross margin 378,800 Selling and administrative expenses 550,000 Net operating loss $ (179, 280) Hi-Tek produced and sold 60,100 units of B300 at a price of $19 per unit and 12,600 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 T500 Total Direct materials $ 420,689 $ 162,900 $ 563,500 Direct labor $ 120,200 $ 42,300 162,500 Manufacturing overhead 536, see Cost of goods sold $ 1,262,50 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $53,000 and $110,000 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 B380 T500 Total Machining (machine-hours) $ 214,620 90,480 62,980 153,300 Setups (setup hours) Product-sustaining number of products) 101,880 1 Other (organization-sustaining costs) Total manufacturing overhead cost $ 536,500 159, 180 300 79 1 NA 379 2 NA 60,900 NA Required 1 Required 2 Required 3 Compute the product margins for the B300 and T500 under the company's traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) T500 Total Product margin B300 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.) B300 T500 Total Product margin $ 0 B300 T500 Total % of % of Amount Amount Amount Traditional Cost System % % % % % Total cost assigned to products $ 0 $ 0 $ 0 Total cost $ 0 B300 Total % of Total Amount T500 % of Total Amount Amount Amount Amount Activity-Based Costing System Direct costs: % % % % % % Indirect costs: % % % % % % $ 0 $ 0 0 Total cost assigned to products Costs not assigned to products: Total cost $ 0
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