Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Hi-Tek Manufacturing, Inc., makes two types of industrial component parts-the B300 and the T500. An absorption costing income statement for the most recent period is shown: Ri-Tek Manufacturing Ine. Income Statement Sales $ 1,689,500 Cost of goods sold 1,220,472 Gross margin 469,028 Selling and administrative expenses 620,000 Net operating loss $ (150,972) Hi-Tek produced and sold 60,100 units of B300 at a price of $20 per unit and 12,500 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: Direct materials Direct labor Manufacturing overhead cost of goods sold 13300 7500 Total $ 400,500 $ 162,200 $ 562,700 $ 120, 400 $ 42,200 162,600 495, 172 $1,220, 422 inces The company has created an activity based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $55,000 and $105,000 of the company's advertising expenses could be directly traced to 1300 and 1500, 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 Overhead $ 207,672 126,000 100,600 60,900 5495, 172 Activity Cost Pool (and Activity Measure) Machining machine-hours) Setups (setup hours) Product suntaining number of product Other (organization-sustaining costs) Total manufacturing overhead cost Activity 1300 T500 Total 90.600 62,100 152,700 80 300 1 1 NA NA NA 220 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. Complete this question by entering your answers in the tabs below. 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.) B300 T500 Total $ Product margin 0 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 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 0 Product margin Saved Hel Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place and and other answers to the nearest whole dollar amounts.) B300 T500 Total % of % of Amount Amount Amount Traditional Cost System % % % % % % Total cost assigned to products $ 0 $ 0 $ 0 Total cost $ 0 B300 T500 Total % of % of Total Amount Amount Total Amount Amount Amount Activity-Based Costing System Direct costs: % % % % % Indirect costs: % % % % % % $ 0 $ 0 Total cost assigned to products Costs not assigned to products: 0 Total cost

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Using QuickBooks Accountant 2018 For Accounting

Authors: Glenn Owen

16th Edition

0357042085, 9780357042083

More Books

Students also viewed these Accounting questions

Question

b. Did you suppress any of your anger? Explain.

Answered: 1 week ago