Hi-Tek Manufacturing, Incorporated, makes two industrial component parts-B300 and T500. An absorption costing income stat 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 $ 1,706,000 1,221,008 484,992 570,000 $ (85,008)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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 cost
B300
$ 400,600
$ 120,700
The company created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation t
concluded that $60,000 and $104,000 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
ted company's manufacturing overhead to four activities as shown below:
Product margin
B300
T500
$ 162,300
$ 42,300
Complete this question by entering your answers in the tabs below.
T500
Total
$ 562,900
163,000
495, 108
$ 1,221,008
Manufacturing
Overhead
$ 202,488
131, 120
100, 600
60,900
$495, 108
< Required 1
B300
90,900
Required:
1. Compute the product margins for 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.
Total
78
1
ΝΑ
Required 2 >
Activity
T500
62,500
220
1
Required 1 Required 2 Required 3
Compute the product margins for 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.
ΝΑ
Total
153,400
298
2
ΝΑ
Transcribed Image Text: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 cost B300 $ 400,600 $ 120,700 The company created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation t concluded that $60,000 and $104,000 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 ted company's manufacturing overhead to four activities as shown below: Product margin B300 T500 $ 162,300 $ 42,300 Complete this question by entering your answers in the tabs below. T500 Total $ 562,900 163,000 495, 108 $ 1,221,008 Manufacturing Overhead $ 202,488 131, 120 100, 600 60,900 $495, 108 < Required 1 B300 90,900 Required: 1. Compute the product margins for 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. Total 78 1 ΝΑ Required 2 > Activity T500 62,500 220 1 Required 1 Required 2 Required 3 Compute the product margins for 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. ΝΑ Total 153,400 298 2 ΝΑ
Hi-Tek Manufacturing, Incorporated, makes two industrial component parts-B300 and T500. An absorption costing income statemen
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 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
Activity Cost Pool (and Activity Measure)
Machining (machine-hours)
Setups (setup hours)
Product-sustaining (number of products)
Other (organization-sustaining costs)
Total manufacturing overhead cost
B300
$ 400,600
$ 120,700
The company created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team
concluded that $60,000 and $104,000 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:
$ 1,706,000
1,221,008
484,992
570,000
$ (85,008)
Required 1 Required 2 Required 3
Product margin
Complete this question by entering your answers in the tabs below.
B300
T500
$ 162,300
$ 42,300
T500
Total
$562,900
163,000
495,108
$ 1,221,008
Manufacturing
Overhead
$ 202,488
131, 120
100, 600
60,900
$ 495, 108
< Required 1
Required:
1. Compute the product margins for 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.
B300
90,900
Total
78
1
ΝΑ
Activity
T500
62,500
220
Required 3 >
1
Compute the product margins for B300 and T500 under the activity-based costing system.
Note: Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal
places.
ΝΑ
Total
153,400
298
2
ΝΑ
Transcribed Image Text:Hi-Tek Manufacturing, Incorporated, makes two industrial component parts-B300 and T500. An absorption costing income statemen 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 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 Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost B300 $ 400,600 $ 120,700 The company created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $60,000 and $104,000 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: $ 1,706,000 1,221,008 484,992 570,000 $ (85,008) Required 1 Required 2 Required 3 Product margin Complete this question by entering your answers in the tabs below. B300 T500 $ 162,300 $ 42,300 T500 Total $562,900 163,000 495,108 $ 1,221,008 Manufacturing Overhead $ 202,488 131, 120 100, 600 60,900 $ 495, 108 < Required 1 Required: 1. Compute the product margins for 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. B300 90,900 Total 78 1 ΝΑ Activity T500 62,500 220 Required 3 > 1 Compute the product margins for B300 and T500 under the activity-based costing system. Note: Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places. ΝΑ Total 153,400 298 2 ΝΑ
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