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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-Te Manufacturing Inc. Income Statement Cost of goods sold Gross margin Selling and administrative expenses Net operating loss $ 1,695,500 1,218,042 477,458 600.000 $ (122.542) Hi-Tek produced and sold 60.400 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: B200 $ 400, 800 $ 120, 400 1500 $ 163,000 $ 42, 600 Direct materials Direct labor Manufacturing overhead Cost of goods sold Total $ 562.800 163.000 491, 242 $ 1.218,042 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 $108,000 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 Overhead $ 204.022 124,320 102.000 60,900 $ 491.242 B200 90,500 76 Activity 1500 Total 62, 900 152, 400 220 Activity Cost Pool (and Activity Measure) Machining machine-hours) Setups (setup hours) Product-sustaining number of products) Other organisation-sustaining costs) Total manufacturing overhead cost 296 NA 12 NA 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 $108,000 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 Overhead $ 204,022 124.320 102,000 60,900 $ 491,242 B300 90,500 76 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 Activity T500 Total 62.900 153.400 220 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 T 500 Total Product margin 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 T 500 Total Product margin Required 1 Required 2 Required 3 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 Traditional Cost System 1 Total cost assigned to products Total cost T500 Total B300 % of Total Amount % of Total Amount Amount Amount Amount Activity-Based Costing System Direct costs: Indirect costs: Total cost assigned to products Costs not assigned to products: Total cost
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