Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts--the B300 and the 1500. 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, Incorporated, makes two types of industrial component parts--the B300 and the 1500. An absorption costing income statement for the most recent period is shown HiTek Manufacturing Incorporated Income Statement Sales $ 1,768,200 Cost of goods sold 1,224,864 Gross margin 543,336 Selling and administrative expenses 640,000 Het operating love $(96,664) Hi-Tek produced and sold 60,200 units of 8300 at a price of $21 per unit and 12,600 units of T500 at a price of $40 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, 500 $ 162,800 $ 563,300 Direct labor $ 120,900 $ 42,400 163,300 Manufacturing overhead 498,264 Cost of goods sold $ 1,224,864 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 $103,000 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 Cont Pool (and Activity Measure) Overbead 1300 1500 Total Machining (machine-hours) $ 203,814 90,000 62,100 152,100 133,250 Setups (setup hours) 75 325 Product-sustaining (number of producto) 100,200 1 2 61,000 NA NA Other (organization-sustaining costs) Total manufacturing overhead cont $ 498,264 250 1 Required: 1. Compute the product margins for the 8300 and T500 under the company's traditional costing system 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.) T500 Total B300 256,605 Product margin $ 256,605 (Required 1 Required 2 > Required 1 Required 2 Required 3 Compute the product margins for B300 and T500 under the activity-based costing system. (Nega be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.) B300 T500 Total Product margin $ 0 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 Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 places and "Percentage" answers to 1 decimal place and and other answers to the nearest whole dollar amounts.) B300 T500 % of % of Total Amount Amount Amount Traditional Cost System Total cost assigned to products $ 0 $ 0 $ 0 Total cost $ B300 T500 Total Amount % of Total Amount % of Total Amount Amount Amount Activity-Based Casting System Direct costs: TIGUI US Oyun $ 0 $ 0 Total cost assigned to products $ 0 $ 0 Total cost B300 T500 ook Total Amount % of Total Amount % of Total Amount Amount Amount int Activity-Based Costing System Direct costs: rint rences Indirect costs: $ 0 $ 0 0 Total cost assigned to products Costs not assigned to products: $ 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

Accounting Theory Contemporary Accounting Issues

Authors: Thomas G. Evans

1st Edition

0324107846, 9780324107845

More Books

Students also viewed these Accounting questions

Question

Who responds to your customers complaint letters?

Answered: 1 week ago

Question

Under what circumstances do your customers write complaint letters?

Answered: 1 week ago