Hi-Tek Manufacturing, Incorporated, makes two types of Industrial component parts-the B300 and the T500. An absorption costing income statement for the most recent period is shown: #2-Tak Manufacturing Incorporated Income Statement Sales $ 1,635,200 Cost of goods sold 1,222.262 Gross margin 412,438 Selling and administrative expenses 570,000 Not operating 100 $ (157,562) Hi-Tek produced and sold 60,200 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. 3300 7500 Total Direct materials $ 400,000 $ 162,900 $ 563,700 Direct labor $ 120,000 342.100 162,900 Manufacturing overhead 496,162 Cost of goods gold $1.222,762 The company has created on activitybased costing system to evaluate the profitability of its products. Hi Tok's ABC implementation team concluded that $56,000 and $105,000 of the company's advertising expenses could be directly traced to 8300 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 (nachine-hours) Setups (netap hours) Product-sustaining number of products) Other (organisation-staining conta) Total manufacturing overhead cost Manufacturing Ovechead $ 199,382 133.980 102,000 50.800 $ 456,162 1300 90,100 79 1 NA Activity T500 62,100 240 1 RA Total 152,200 319 2 NA Required: 1. Compute the product margins for the B300 and 7500 under the company's traditional costing system 2. Compute the product margins for B300 and 1500 under the activity based costing system Pronare a cantitative ronarienn of the traditional and artvihaced cost accinnmonte distributed the companys manutactuning overhead to tour activities as snown below: NA Manufacturing Activity Activity Cost Pool and Activity Measure) Overhead B300 T500 Total Machining machine-hours) $ 199, 382 90,100 62,100 152,200 Setups (setup hours) 133,980 79 240 319 Product-sustaining number of products) 102,000 1 1 2 Other (organization-sustaining costs) 60,800 NA NA Total manufacturing overhead cost $ 496,162 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.) 8.300 T500 Total Product margin $ Required 2 > distributed the company's manufacturing overhead to tour activities as shown below: Manufacturing Activity Activity Cont Pool (and activity Measure) Overhead B300 T500 Total Machining (machine-hours) $ 199,382 90, 100 62, 100 152,200 Setup (setup hours) 133,980 79 240 319 Product-sustaining (number of products) 102,000 1 1 2 Other organization-sustaining costs) 60,800 NA NA NA Total manufacturing overhead cost $ 496,162 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 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.) 3300 T500 Total Product margin SUU 1 DUU % of % of Total Amount Amount Amount Traditional Cost System 0 $ 0 $ 0 $ Total cost assigned to products $ 0 Total cost B300 T500 Total Amount % of Total Amount % of Total Amount Amount Amount Activity-Based Costing System Direct costs: Indirect costs $ 0 $ 0 0 Total cost assigned to products Costs not assigned to products $ Total cost 0
