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.
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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.
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- Low-Tek Manufacturing Incorporated makes two types of industrial component parts - the B300 and the T500. The Income Statement for the most recent period is shown below: Low-Tek Manufacturing Incorporated Income Statement Sales Cost of goods sold Gross profit P2,100,000 1,600,000 500,000 550,000 Selling and administrative expenses Net operating loss P(50,000) Low-Tek produced and sold 70,000 units of B300 at a price of P20 per unit and 17,500 units of T500 at a price of P40 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor cost as the allocation based. Additional information relating to the company's two product lines is shown below: T500 TOTAL B300 P436,300 P251,700 P688,000 Direct materials Direct labor P200,000 P104,000 304,000 Manufacturing overhead Cost of goods sold 608,000 P1,600,000 The company has created an activity -based costing system to evaluate the profitability of its products.…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 Net operating loss $ 1,651,800 1,211,394 440,406 640,000 $ (199,594) Hi-Tek produced and sold 60,200 units of B300 at a price of $19 per unit and 12,700 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 $ 400,700 $ 162,000 $ 120,200 $ 42,000 T500 Total $ 562,700 162,200 486,494 $ 1,211,394 The company has created an activity-based costing system to evaluate the profitability…Hi-Tek Manufacturing, Incorporated, makes two industrial component parts-8300 and T500. An absorption costing income statement for the most recent period is shown below. Hi-Tek Manufacturing, Incorporated Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss $ 1,647,600 1,215,224 432,376 620,000 $ (187,624) Hi-Tek produced and sold 60,400 units of B300 at a price of $19 per unit and 12,500 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 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 8388 T500 $ 400,400 $ 120,100 $163,000 $ 42,300 Total $ 563,400 162,400 489,424 $1,215,224 The company created an activity-based costing system to evaluate the profitability of its products.…
- 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 IncorporatedIncome Statement Sales $ 1,637,200 Cost of goods sold 1,230,044 Gross margin 407,156 Selling and administrative expenses 610,000 Net operating loss $ (202,844) Hi-Tek produced and sold 60,100 units of B300 at a price of $19 per unit and 12,700 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: B300 T500 Total Direct materials $ 400,800 $ 162,200 $ 563,000 Direct labor $ 120,100 $ 42,500 162,600 Manufacturing overhead 504,444 Cost of goods sold $ 1,230,044 The company has created an…Jackson Manufacturing, Inc., makes two types of industrial component parts—the XT-100 and the LT-200. An absorption costing income statement for the most recent period is shown: Jackson Manufacturing Inc. Income Statement Sales $2,100,000 Cost of goods sold 1,600,000 Gross margin 500,000 Selling and administrative expenses 550,000 Net operating loss $ (50,000) Table Summary: Income statement with two-line heading. Descriptions of income items are in first column and dollar values in second column. Jackson produced and sold 70,000 units of XT-100 at a price of $20 per unit and 17,500 units of LT-200 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:XT-100 LT-200 Total Direct materials $436,300 $251,700 $ 688,000 Direct labor $200,000 $104,000 304,000 Manufacturing…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 IncorporatedIncome Statement Sales $ 1,714,000 Cost of goods sold 1,224,031 Gross margin 489,969 Selling and administrative expenses 580,000 Net operating loss $ (90,031) Hi-Tek produced and sold 60,100 units of B300 at a price of $20 per unit and 12,800 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: B300 T500 Total Direct materials $ 400,300 $ 162,500 $ 562,800 Direct labor $ 120,900 $ 42,300 163,200 Manufacturing overhead 498,031 Cost of goods sold $ 1,224,031 The company has created an…
- 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: Hi-Tek Manufacturing Inc.Income Statement Sales $ 1,712,000 Cost of goods sold 1,244,712 Gross margin 467,288 Selling and administrative expenses 620,000 Net operating loss $ (152,712 ) Hi-Tek produced and sold 60,200 units of B300 at a price of $20 per unit and 12,700 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: B300 T500 Total Direct materials $ 400,700 $ 162,100 $ 562,800 Direct labor $ 120,500 $ 42,700 163,200 Manufacturing overhead 518,712 Cost of goods sold $ 1,244,712 The company has created an…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: Hi-Tek Manufacturing Inc.Income Statement Sales $ 1,712,000 Cost of goods sold 1,244,712 Gross margin 467,288 Selling and administrative expenses 620,000 Net operating loss $ (152,712 ) Hi-Tek produced and sold 60,200 units of B300 at a price of $20 per unit and 12,700 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: B300 T500 Total Direct materials $ 400,700 $ 162,100 $ 562,800 Direct labor $ 120,500 $ 42,700 163,200 Manufacturing overhead 518,712 Cost of goods sold $ 1,244,712 The company has created an…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: Hi-Tek Manufacturing Inc.Income Statement Sales $ 1,699,300 Cost of goods sold 1,232,464 Gross margin 466,836 Selling and administrative expenses 630,000 Net operating loss $ (163,164 ) Hi-Tek produced and sold 60,200 units of B300 at a price of $20 per unit and 12,700 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: B300 T500 Total Direct materials $ 400,900 $ 162,900 $ 563,800 Direct labor $ 120,900 $ 42,800 163,700 Manufacturing overhead 504,964 Cost of goods sold $ 1,232,464 The company has…
- 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: Hi-Tek Manufacturing Inc.Income Statement Sales $ 1,755,300 Cost of goods sold 1,253,994 Gross margin 501,306 Selling and administrative expenses 610,000 Net operating loss $ (108,694 ) Hi-Tek produced and sold 60,000 units of B300 at a price of $21 per unit and 12,700 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: B300 T500 Total Direct materials $ 400,800 $ 162,200 $ 563,000 Direct labor $ 120,200 $ 42,400 162,600 Manufacturing overhead 528,394 Cost of goods sold $ 1,253,994 The company has…Hi-Tek Manufacturing, Incorporated, makes two industrial component parts-B300 and T500. An absorption costing income state for the most recent period is shown below: Hi-Tek Manufacturing, Incorporated Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss. Hi-Tek produced and sold 60,300 units of B300 at a price of $20 per unit and 12,500 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 labo 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 $ 1,706,000 1,221,008 484,992 570,000 $ (85,008) Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead…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 IncorporatedIncome Statement Sales $ 1,716,000 Cost of goods sold 1,209,314 Gross margin 506,686 Selling and administrative expenses 580,000 Net operating loss $ (73,314) Hi-Tek produced and sold 60,400 units of B300 at a price of $20 per unit and 12,700 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: B300 T500 Total Direct materials $ 400,100 $ 162,000 $ 562,100 Direct labor $ 121,000 $ 42,700 163,700 Manufacturing overhead 483,514 Cost of goods sold $ 1,209,314 The company has created an…