Hi-Tek Manufacturing Inc. Income Statement Sales $ 1,714,000 Cost of goods sold Gross margin Selling and administrative expenses 1,246,844 467,156 590,000 Net operating loss 2$ (122,844) 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: взе T500 Total $ 400,100 $ 120,200 $ 162,100 $ $ 42,000 Direct materials 562,200 162,200 522,444 Direct labor Manufacturing overhead Cost of goods sold $ 1,246,844

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Chapter1: Financial Statements And Business Decisions
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Hi-Tek Manufacturing Inc.
Income Statement
$ 1,714,000
1,246,844
467,156
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses
590,000
(122,844)
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
$4
562, 200
162, 200
Direct labor
$
42,000
Manufacturing overhead
522,444
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
Т500
Total
$ 209,884
150,060
91,000
62,200
153,200
76
290
366
101,600
1
1
2
60,900
NA
NA
NA
Total manufacturing overhead cost
$ 522,444
Transcribed Image Text:Hi-Tek Manufacturing Inc. Income Statement $ 1,714,000 1,246,844 467,156 Sales Cost of goods sold Gross margin Selling and administrative expenses 590,000 (122,844) 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 $4 562, 200 162, 200 Direct labor $ 42,000 Manufacturing overhead 522,444 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 Т500 Total $ 209,884 150,060 91,000 62,200 153,200 76 290 366 101,600 1 1 2 60,900 NA NA NA Total manufacturing overhead cost $ 522,444
Required 1
Required 2
Required 3
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.)
B300
T500
Total
Product
$ 422,070
$ 56,014 X $ 478,084
margin
Transcribed Image Text:Required 1 Required 2 Required 3 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.) B300 T500 Total Product $ 422,070 $ 56,014 X $ 478,084 margin
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