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: Hi-Tek Manufacturing Inc. Income Statement Sales $ 1,767,600 Cost of goods sold 1,211,976 Gross margin 555, 624 Selling and administrative expenses 620,000 Net operating loss $ (64,376) Hi-Tek produced and sold 60,400 units of B300 at a price of $21 per unit and 12,800 units of T500 at a price of $39 per 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. it. The Direct materials Direct labor Manufacturing overhead Cost of goods sold B300 T500 Total $ 400,500 $ 162, 480 $ 562,900 $ 120,480 $ 43,000 163,400 485,676 $1,211,976 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 $105,000 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 B300 T500 Total Machining (machine-hours) $ 199,906 90,200 62,400 Setups (setup hours) 152,600 124,270 79 210 Product-sustaining (number of products) 289 101,200 1 1 2 Other (organization-sustaining costs) 60.300 NA NA Total manufacturing overhead cost NA $ 485,676 Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost rau ILLU Overhead $ 199,906 124, 270 101,200 60,300 $ 485,676 ALLAVEL B300 T500 Total 90,200 62,400 152,600 79 210 289 1 1 2 NA NA NA 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 Product margin Total $ 0 Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost ranu i dului 1119 Overhead $ 199,906 124,270 101,200 60,300 $ 485,676 ALLAVES B300 T500 Total 90,200 62,400 152,600 79 210 289 1 1 2 NA NA NA Required: 1. Compute the product margins for the B300 and 1500 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 B300 and T500 under the activity-based costing system. (Negative product margins shou 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 % % % % % % $ 0 $ $ 0 Total cost assigned to products $ 0 Total cost B300 T500 Total % of % of Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs: % % % % % % Indirect costs: % % % % % % $ 0 Total cost assigned to products Costs not assigned to products: $ 0 0 Total cost $ 0
