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 Gross margin Selling and administrative expenses Net operating loss $ 1,651,800 1,211,394 440,406 640,000 $ (199,594) Hi-Tek produced and sold 60,200 units of 8300 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 Total $562,788 8300 T500 $ 400,700 $ 162,000 $ 120,200 $ 42,000 162,200 486,494 $1,211,394 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $53,000 and $102,000 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. 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 Manufacturing Overhead 8300 Activity T500 Total $210,174 90,000 62,300 152,300 115,620 72 210 282 100,600 1 1 2 60,100 NA NA NA $ 486,494 Required 1 Required 2 Required 3 Compute the product margins for the B300 and T500 under the company's traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) Product margin 8300 T500 Total
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 Gross margin Selling and administrative expenses Net operating loss $ 1,651,800 1,211,394 440,406 640,000 $ (199,594) Hi-Tek produced and sold 60,200 units of 8300 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 Total $562,788 8300 T500 $ 400,700 $ 162,000 $ 120,200 $ 42,000 162,200 486,494 $1,211,394 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $53,000 and $102,000 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. 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 Manufacturing Overhead 8300 Activity T500 Total $210,174 90,000 62,300 152,300 115,620 72 210 282 100,600 1 1 2 60,100 NA NA NA $ 486,494 Required 1 Required 2 Required 3 Compute the product margins for the B300 and T500 under the company's traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) Product margin 8300 T500 Total
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
Gross margin
Selling and administrative expenses
Net operating loss
$ 1,651,800
1,211,394
440,406
640,000
$ (199,594)
Hi-Tek produced and sold 60,200 units of 8300 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
Total
$562,700
8300
T500
$ 400,700 $ 162,000
$ 120,200 $ 42,000
162,200
486,494
$1,211,394
The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC Implementation
team concluded that $53,000 and $102,000 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)
Setups (setup hours)
Product-sustaining (number of products)
Other (organization-sustaining costs)
Total manufacturing overhead cost
Manufacturing
Overhead
8300
Activity
T500
Total
$210,174
90,000
62,300
152,300
115,620
72
210
100,600
1
1
282
2
60,100
NA
NA
NA
$ 486,494
Required 1 Required 2 Required 3
Compute the product margins for the 8300 and T500 under the company's traditional costing system. (Round your
intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)
Product margin
8300
T500
Total
Required 1 Required 2 Required 3
Compute the product margins for 8300 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.)
Product margin
8300
T500
Amount
Traditional Cost System
Total
B300
% of
Amount
T500
% of
Total Amount
Total cost assigned to products
$
$
$
Total cost
Activity-Based Costing System
Direct costs:
Direct labor
Indirect costs:
$
B300
T500
% of
Total
% of
Total Amount
Total
Amount
Amount
Amount
Amount
Total cost assigned to products
Costs not assigned to products:
$
0
$
Total cost
$
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