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
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 $ 1,631,400 Cost of goods sold 1,230, 768 Gross margin 488,632 Selling and administrative expenses 580,000 Net operating loss $ (179,368) Hi-Tek produced and sold 60.000 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: 8300 T500 Total Direct materials $ 400,200 $ 162,7ee $ 562,900 Direct labor $ 120, 400 $ 42,200 162,600 Manufacturing overhead 5e5, 268 st of goods sold $ 1,238,768 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $56,000 and $104,000 of the company's advertising expenses could be directly traced to 1300 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. Activity Cost Pool (and Activity Measure) Machining (eachine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost Manufacturing Overhead $ 200,488 134,480 101,600 3300 98,43 78 2 NA Activity 1500 Total 62,900 153,180 250 328 1 2 NA NA $505,268 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. OOK Complete this question by entering your answers in the tabs below. Tences 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 Red Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Real sd 2 Required 3 Compute the product margins for 8300 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 Required 1 Required 2 Required Prepare a quantitative comparison of the Required 3 activity-based cost assignments. (Round your intermediate calculations to 2 deci places and "Percentage" answers to 1 decimal place and and other answers to the nearest whole dollar amounts.) B300 T500 Total % of 9% of Amount Amount Amount Traditional Cost System 96 96 9 96 %% 96 Total cost assigned to products 3 0 S Total cost B300 T500 Total

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

Cengage Learnings Online General Ledger For Heintz/parrys College Accounting, 2, 2 Terms (12 Months)

Authors: James A. Heintz, Robert W. Parry

22nd Edition

1305669991, 9781305669994

More Books

Students also viewed these Accounting questions