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Saved 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
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Saved 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: Hi-Tek Manufacturing Incorporated Income Statement Sales Cost of goods sold Selling and administrative expenses Gross margin k Net operating loss ces $ 1,768,200 1,250,450 517,750 610,000 $ (92,250) Hi-Tek produced and sold 60,200 units of B300 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: Direct materials Direct labor Manufacturing overhead Cost of goods sold B300 T500 Total $ 400,000 $ 120,700 $ 162,700 $ 42,000 $ 562,700 162,700 525,050 $ 1,250,450 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 $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: Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Manufacturing Overhead $ 206,550 157,500 100, 200 B300 90,300 Activity T500 Total 62,700 153,000 75 300 1 1 375 2 Next Help Save & Exit Check 3 nts Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Manufacturing Overhead Activity B300 T500 Total $ 206,550 157,500 100, 200 60,800 $525,050 90,300 62,700 75 300 153,000 375 1 1 2 NA NA NA eBook Total manufacturing overhead cost Hint Required: Print ferences 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. Note: Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount. Product margin re to search B300 O T500 Total THX Required 2 > Prev 1 of 3 Next > 67F
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