- Hi Tek Manufacturing Inc Makes Two Types Of Industrial Component Parts The B300 And The T500 An Absorption Costing In 1 (46.06 KiB) Viewed 196 times
- Hi Tek Manufacturing Inc Makes Two Types Of Industrial Component Parts The B300 And The T500 An Absorption Costing In 2 (14.83 KiB) Viewed 196 times
- Hi Tek Manufacturing Inc Makes Two Types Of Industrial Component Parts The B300 And The T500 An Absorption Costing In 3 (37.06 KiB) Viewed 196 times
- Hi Tek Manufacturing Inc Makes Two Types Of Industrial Component Parts The B300 And The T500 An Absorption Costing In 4 (32.41 KiB) Viewed 196 times
Hi-Tek Manufacturing Inc. makes two types of industrial component parts--the B300 and the T500. An absorption costing income statement for the most recent period is shown below: Hi-Tek Manufacturing Inc. Income Statement Sales $ 2,100,000 cost of goods sold 1,600,000 Gross margin 500,000 Selling and administrative expenses 558,000 Net operating loss (50,000) 5 Hi-Tek produced and sold 70,000 units of 8300 at a price of $20 per unit and 17.500 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 labour dollars as the allocation base. Additional information relating to the company's two product lines is shown below: $ B300 436,300 200,000 T500 $ 251,700 $ 104,000 $ Direct materials Direct labour Manufacturing overhead Cost of goods sold Total 688,000 304,000 688,000 $ 1,600,000 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $50,000 and $100,000 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: Manufacturing Activity Activity Cost Pool (and Activity Measure) Overhead B300 Total Machining (machine-hours) $ 213,500 90,000 62,500 152,500 Setups (setup hours) 157,500 75 300 375 Product-sustaining number of products) 120,000 2 Other (organization-sustaining costs) 117,000 NA NA NA Total manufacturing overhead cost $ 608,000 T500 1 1
Required: 1. Compute the product margins for the B300 and T500 under the company's traditional costing system. 3300 T500 Total Product margin 2. 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
3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answer to 1 decimal place. (le 1234 should be entered as 12.3)) Total B300 % of Total Amount T500 % of Total Amount Amount Amount Amount Traditional Cost System Total cost assigned to products Total cost T500 Total 3300 % of Amount Total Amount % of Amount Total Amount Amount Activity-Based Costing System Direct costs Indirect costs
B300 T500 Total % of % of Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs: Indirect costs: Total cost assigned to products Costs not assigned to products: Total cost