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+ Skipped Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts-the B300 and the T500. An absorption costing income statement for the most
+ Skipped 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 eBook Gross margin Selling and administrative expenses $1,766,100 1,218,455 Net operating loss 547,645 570,000 $(22,355) Hi-Tek produced and sold 60,100 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: Mc Direct materials Direct labor Manufacturing overhead Cost of goods sold B300 7500 $ 400,200 $ 162,000 $ 120,700 $ 42,500 Total $562,200 163,200 493,055 $1,218,455 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $58,000 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). Setues foetus hours) Manufacturing Overhead $199,775 132.080 1300 90,300 72 Activity T500 62.200 230 Total 152,500 302
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