Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts-the 5300 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 Not operating loss Hi-Tek produced and sold 60,200 units of 5300 at a price of $21 per unit and 12,600 units of T500 at a price of $39 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: 8300 $ 120,100 Direct materials Direct labor Manufacturing overhead Cost of goods sold $(08,607) Activity Cost Pool (and Activity Measure) Machining (nachine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost 1500 $ 162,000 $42,800 Total $ 163,100 162,000 $1,254,207 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC Implementation team concluded that $51,000 and $108,000 of the company's advertising expenses could be directly traced to 5300 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 Overhead $208,377 257,520 101,600 60,800 $ 528,297 90, 100 78 NA Activity 62,000 280 1 NA Total 152,100 2 NA Required: 1. Compute the product margins for the 5300 and T500 under the company's traditional costing system. 2 Compute the product margins for 5300 and T500 under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost essignments.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Required 1 Required 2 Required 3
Prepare a quantitative comparison of the traditional and activity-based cost assignments.
Note: Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place and and other answers to the
nearest whole dollar amounts.
Traditional Cost System
Total cost assigned to products
Total cost
Activity-Based Costing System
Direct costs:
Indirect costs:
Total cost assigned to products
Costs not assigned to products:
Total cost
S
S
Amount
Amount
B300
0
B300
% of
% of
Total
Amount
$
$
T500
Amount
Amount
0
T500
% of
% of
Total
Amount
Total Amount
Total Amount
$
0
0
0
Transcribed Image Text:Required 1 Required 2 Required 3 Prepare a quantitative comparison of the traditional and activity-based cost assignments. Note: Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place and and other answers to the nearest whole dollar amounts. Traditional Cost System Total cost assigned to products Total cost Activity-Based Costing System Direct costs: Indirect costs: Total cost assigned to products Costs not assigned to products: Total cost S S Amount Amount B300 0 B300 % of % of Total Amount $ $ T500 Amount Amount 0 T500 % of % of Total Amount Total Amount Total Amount $ 0 0 0
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
Direct materials
Direct labor
Hi-Tek produced and sold 60,200 units of 8300 at a price of $21 per unit and 12,600 units of T500 at a price of $39 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:
Manufacturing overhead
Cost of goods sold
Activity Cast Pool (and Activity Measure)
Machining (machine-hours)
Setups (setup hours)
Product-sustaining (number of products)
Other (organization-sustaining costs)
Total manufacturing overhead cost
$ 1,755,600
1,254,207
The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation
team concluded that $51,000 and $108,000 of the company's advertising expenses could be directly traced to 5300 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:
Required 1 Required 2 Required 3
581.303
680,000
$ (98,697)
Product margin
8300
$ 400,200
$ 120,100
B300
T580
$ 162,000
$ 42,800
Complete this question by entering your answers in the tabs below.
T600
Manufacturing
Overhead
$288,377
157,528
181,600
60,800
$ 528,297
Total
$ 563,100
162,900
528,297
$ 1,254,297
S
90,180
78
Required:
1 Compute the product margins for the 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
1
NA
Activity
1500
62,000
Compute the product margins for the 8300 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.
288
1
NA
Total
152,180
358
2
NA
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 Direct materials Direct labor Hi-Tek produced and sold 60,200 units of 8300 at a price of $21 per unit and 12,600 units of T500 at a price of $39 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: Manufacturing overhead Cost of goods sold Activity Cast Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost $ 1,755,600 1,254,207 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $51,000 and $108,000 of the company's advertising expenses could be directly traced to 5300 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: Required 1 Required 2 Required 3 581.303 680,000 $ (98,697) Product margin 8300 $ 400,200 $ 120,100 B300 T580 $ 162,000 $ 42,800 Complete this question by entering your answers in the tabs below. T600 Manufacturing Overhead $288,377 157,528 181,600 60,800 $ 528,297 Total $ 563,100 162,900 528,297 $ 1,254,297 S 90,180 78 Required: 1 Compute the product margins for the 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 1 NA Activity 1500 62,000 Compute the product margins for the 8300 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. 288 1 NA Total 152,180 358 2 NA
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