HiTek Manufacturing, Incorporated makes two types of industrial component parts--the B300 and the 1500. An absorption co

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Hitek Manufacturing Incorporated Makes Two Types Of Industrial Component Parts The B300 And The 1500 An Absorption Co 1 (43.66 KiB) Viewed 54 times

HiTek 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 yekufacturing Incorporated TOOD Statut Sales 5 1.760,200 Cost of toods solo 1.222.252 Gross Barn 545,440 Selling and administrative expenses 630.000 Net operating 105 5(04,552) Hi Tek produced and told 60,200 units of 8300 at a price of $21 per unit and 12,600 units of 1500 at a price of $40 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plontwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company's two product lines is shown below. Direct ateriat Direct labor Manufacturing overhead cost of toods told 8300 $ 400,100 $ 120,600 T500 5 162,300 $ 42,100 Total $ 562,400 162.700 497,652 $ 1,222,752 The company has created an activity based costing system to evaluate the profitability of its products. H-Teks ABC implementation team concluded that $60,000 and $107000 of the company's advertising expenses could be directly traced to 1300 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 Cost Pool (and Activity measure Overhead 100 1500 Total Machining (nachine hours) $ 210,42 90,900 62,700 153,600 Setups (Setup hours) 124, 120 70 220 296 Product-sustaining (number of products) 102,000 1 other organization sustaining costs) 60.900 Total manufacturing overhead cost $ 497,652 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 1 HA 2 NA NA