Hi-Tek Manufacturing, Incorporated, makes two industrial component parts-B300 and T500. An absorption costing income statefor the most recent period is shown below:Hi-Tek Manufacturing, IncorporatedIncome StatementSalesCost of goods soldGross marginSelling and administrative expensesNet 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 $40 per unit. Thecompany's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labodollars as the allocation base. Additional information relating to the company's two product lines is shown below:Direct materialsDirect laborManufacturing overheadCost of goods sold$ 1,706,0001,221,008484,992570,000$ (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 costB300$ 400,600$ 120,700The company created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation tconcluded that $60,000 and $104,000 of the company's advertising expenses could be directly traced to B300 and T500,respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team alsoted company's manufacturing overhead to four activities as shown below:Product marginB300T500$ 162,300$ 42,300Complete this question by entering your answers in the tabs below.T500Total$ 562,900163,000495, 108$ 1,221,008ManufacturingOverhead$ 202,488131, 120100, 60060,900$495, 108< Required 1B30090,900Required: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.Total781ΝΑRequired 2 >ActivityT50062,5002201Required 1 Required 2 Required 3Compute 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.ΝΑTotal153,4002982ΝΑ Hi-Tek Manufacturing, Incorporated, makes two industrial component parts-B300 and T500. An absorption costing income statemenfor the most recent period is shown below:Hi-Tek Manufacturing, IncorporatedIncome StatementSalesCost of goods soldGross marginSelling and administrative expensesNet operating lossHi-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 $40 per unit. Thecompany's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labordollars as the allocation base. Additional information relating to the company's two product lines is shown below:Direct materialsDirect laborManufacturing overheadCost of goods soldActivity Cost Pool (and Activity Measure)Machining (machine-hours)Setups (setup hours)Product-sustaining (number of products)Other (organization-sustaining costs)Total manufacturing overhead costB300$ 400,600$ 120,700The company created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation teamconcluded that $60,000 and $104,000 of the company's advertising expenses could be directly traced to B300 and T500,respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team alsodistributed the company's manufacturing overhead to four activities as shown below:$ 1,706,0001,221,008484,992570,000$ (85,008)Required 1 Required 2 Required 3Product marginComplete this question by entering your answers in the tabs below.B300T500$ 162,300$ 42,300T500Total$562,900163,000495,108$ 1,221,008ManufacturingOverhead$ 202,488131, 120100, 60060,900$ 495, 108< Required 1Required: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.B30090,900Total781ΝΑActivityT50062,500220Required 3 >1Compute 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 decimalplaces.ΝΑTotal153,4002982ΝΑ

Activity-Based Costing (ABC) is a costing methodology that assigns overhead costs to specific…

Answered: Hi-Tek Manufacturing, Incorporated,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Hancock Company manufactures and sells two lines of furniture, case goods and upholstery, During the most recent accounting period, the Case Goods and Upholstery Divisions sold 17,400 and 2,360 units, respectively. The company's most recent financial statements are shown below. Sales Less cost of goods sold: Unit-level production cost Depreciation, production equipment Gross margin Less operating expenses: Case Goods Upholstery $1,852,000 $472,000 1,156,000 276,000 $420,000 283,200 70,800 $118,000 Unit-level selling and administrative costs Corporate-level facility expenses (fixed) Net income (loss) If unit sales for both divisions increased 10% the company would report which of the following? 69,600 64,000 $286,400 59,000 64,000 $(5,000)
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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…
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (42,000 units x $43.60 per unit) Cost of goods sold (42,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,831, 200 966,000 865,200 483,000 $ 382,200 The company's selling and administrative expenses consist of $315,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: Direct materials. Direct labor $ 10 4 Variable manufacturing overhead 3 Fixed manufacturing overhead ($276,000 46,000 units) 6 Absorption costing unit product cost $ 23 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption…
Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in the cost of goods sold. Saxon, Inc.Absorption Costing Income StatementFor the Year Ended December 31 Sales $1,200,000 Cost of goods sold: Cost of goods manufactured $840,000 Ending inventory (168,000) Total cost of goods sold (672,000) Gross profit $528,000 Selling and administrative expenses (289,000) Operating income $239,000 Variable Statement Under variable costing, the cost of goods manufactured includes only variable manufacturing costs. This type of income statement includes a computation of manufacturing margin. Saxon, Inc.Variable Costing Income StatementFor the Year Ended December 31 Sales $1,200,000 Variable cost of goods sold: Variable cost of goods manufactured $600,000 Ending inventory (120,000) Total variable cost of goods sold (480,000) Manufacturing…
Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in the cost of goods sold. Saxon, Inc.Absorption Costing Income StatementFor the Year Ended December 31 Sales $1,200,000 Cost of goods sold: Cost of goods manufactured $840,000 Ending inventory (210,000) Total cost of goods sold (630,000) Gross profit $570,000 Selling and administrative expenses (290,000) Operating income $280,000 Variable Statement Under variable costing, the cost of goods manufactured includes only variable manufacturing costs. This type of income statement includes a computation of manufacturing margin. Saxon, Inc.Variable Costing Income StatementFor the Year Ended December 31 Sales $1,200,000 Variable cost of goods sold: Variable cost of goods manufactured $600,000 Ending inventory (150,000) Total variable cost of goods sold (450,000) Manufacturing margin $750,000…

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