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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)

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
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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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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