The "direct labor" tab right under "Indirect Costs:" is incorrect. I also think something is missing right above the "Total Cost" tab. Please help! Thank you! :) Hi-Tek Manufacturing Inc.Income Statement$ 1,714,0001,246,844467,156590,000(122,844)SalesCost of goods soldGross marginSelling and administrative expensesNet operating loss$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 $40 per unit. Thecompany's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labordollars as the allocation base. Additional information relating to the company's two product lines is shown below:B300T500Total$ 400,100$ 120,200Direct materials$ 162,100562, 200162,200522,444Direct labor$442,000Manufacturing overheadCost of goods sold$ 1,246,844The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementationteam concluded that $53,000 and $109,000 of the company's advertising expenses could be directly traced to B300 and T500,respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team alsodistributed the company's manufacturing overhead to four activities as shown below:ManufacturingActivityActivity Cost Pool (and Activity Measure)Machining (machine-hours)Setups (setup hours)Product-sustaining (number of products)Other (organization-sustaining costs)OverheadB300T500Total$ 209,884150,060101,60060,900$ 522,44491,00062,200153, 20076290366112NANANATotal manufacturing overhead cost B300T500Total% of% ofAmountTotal AmountAmountTotal AmountAmountActivity-Based Costing SystemDirect costs:Direct materials2$400,10071.2 %$162,10028.8 %$562,200Direct labor120,20074.1 %42,00025.9 %162,200Indirect costs:Direct labor124,67059.4 %85,21440.6 %209,884Setups31,16020.8 %118,90079.2 %150,060Product sustaining50,80050.0 %50,80050.0 %101,600Total cost assigned to products2$726,930$459,0141,185,944Costs not assigned to products:Other60,900Total cost$1,246,844

Total selling and administrative costs = $590,000 Advertising cost to B300 = $53,000 Advertising…

B300 T500 Total % of % of Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs: Direct materials $ 400,100 71.2 % $ 162,100 28.8 % 2$ 562,200 Direct labor 120,200 74.1 % 42,000 25.9 % 162,200 % % Indirect costs: Direct labor 124,670 59.4 % 85,214 40.6 % 209,884 Setups 31,160 20.8 % 118,900 79.2 % 150,060 Product sustaining 50,800 50.0 % 50,800 50.0 % 101,600 Total cost assigned to products $ 726,930 $ 459,014 1,185,944 Costs not assigned to products: Other 60,900 Total cost $ 1,246,844

B300 T500 Total % of % of Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs: Direct materials $ 400,100 71.2 % $ 162,100 28.8 % 2$ 562,200 Direct labor 120,200 74.1 % 42,000 25.9 % 162,200 % % Indirect costs: Direct labor 124,670 59.4 % 85,214 40.6 % 209,884 Setups 31,160 20.8 % 118,900 79.2 % 150,060 Product sustaining 50,800 50.0 % 50,800 50.0 % 101,600 Total cost assigned to products $ 726,930 $ 459,014 1,185,944 Costs not assigned to products: Other 60,900 Total cost $ 1,246,844

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

100%

The "direct labor" tab right under "Indirect Costs:" is incorrect. I also think something is missing right above the "Total Cost" tab. Please help! Thank you! :)

Hi-Tek Manufacturing Inc.
Income Statement
$ 1,714,000
1,246,844
467,156
590,000
(122,844)
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating loss
$
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
$ 400,100
$ 120,200
Direct materials
$ 162,100
562, 200
162,200
522,444
Direct labor
$4
42,000
Manufacturing overhead
Cost of goods sold
$ 1,246,844
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 $109,000 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:
Manufacturing
Activity
Activity Cost Pool (and Activity Measure)
Machining (machine-hours)
Setups (setup hours)
Product-sustaining (number of products)
Other (organization-sustaining costs)
Overhead
B300
T500
Total
$ 209,884
150,060
101,600
60,900
$ 522,444
91,000
62,200
153, 200
76
290
366
1
1
2
NA
NA
NA
Total manufacturing overhead cost

B300
T500
Total
% of
% of
Amount
Total Amount
Amount
Total Amount
Amount
Activity-Based Costing System
Direct costs:
Direct materials
2$
400,100
71.2 %
$
162,100
28.8 %
$
562,200
Direct labor
120,200
74.1 %
42,000
25.9 %
162,200
Indirect costs:
Direct labor
124,670
59.4 %
85,214
40.6 %
209,884
Setups
31,160
20.8 %
118,900
79.2 %
150,060
Product sustaining
50,800
50.0 %
50,800
50.0 %
101,600
Total cost assigned to products
2$
726,930
$
459,014
1,185,944
Costs not assigned to products:
Other
60,900
Total cost
$
1,246,844

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