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 Hi-Tek produced and sold 60,400 units of 8300 at a price of $19 per unit and 12,700 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: Direct materials Direct labor Manufacturing overhead Cost of goods sold $ 1,642,900 1,246,912 395,988 590,000 $ (194,012) 8300 T500 $ 400,800 $ 162,100 $ 120,900 $ 42,700 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 Total $ 562,900 163,600 520,412 $ 1,246,912 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation eam concluded that $56,000 and $106,000 of the company's advertising expenses could be directly traced to 8300 and T500, espectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also istributed the company's manufacturing overhead to four activities as shown below: Manufacturing Overhead $ 206,092 153, 120 100, 200 61,000 $ 520,412 8300 90,900 78 1 NA Activity T500 62,900 270 1 NA Total 153,800 348 2 NA

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Chapter1: Financial Statements And Business Decisions
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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.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Compute the product margins for the B300 and T500 under the company's traditional costing system. (Round your
intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)
Product margin
Show Transcribed Text
Required 1 Required 2
Product margin
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.
Complete this question by entering your answers in the tabs below.
Traditional Cost System
Total cost assigned to products
B300
Show Transcribed Text
Total cost
Compute the product margins for 8300 and T500 under the activity-based costing system. (Negative product margins shou
be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.)
Total
Activity-Based Costing System
Direct costs:
Indirect costs:
Total cost assigned to products
Costs not assigned to products:
Required 3
Total cost
8300
T500
4
$
$
T500
Amount
Amount
B300
$
0
B300
Total
$
% of
% of
Total
Amount
0
$
$
Amount
T500
0
T500
Amount
0
% of
% of
Total
Amount
Total Amount
$
$
0
Total Amount
$
0
Transcribed Image Text: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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the product margins for the B300 and T500 under the company's traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) Product margin Show Transcribed Text Required 1 Required 2 Product margin 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. Complete this question by entering your answers in the tabs below. Traditional Cost System Total cost assigned to products B300 Show Transcribed Text Total cost Compute the product margins for 8300 and T500 under the activity-based costing system. (Negative product margins shou be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.) Total Activity-Based Costing System Direct costs: Indirect costs: Total cost assigned to products Costs not assigned to products: Required 3 Total cost 8300 T500 4 $ $ T500 Amount Amount B300 $ 0 B300 Total $ % of % of Total Amount 0 $ $ Amount T500 0 T500 Amount 0 % of % of Total Amount Total Amount $ $ 0 Total Amount $ 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
Hi-Tek produced and sold 60,400 units of B300 at a price of $19 per unit and 12,700 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:
Direct materials
Direct labor
Manufacturing overhead
Cost of goods sold
$ 1,642,900
1,246,912
395,988
590,000
$ (194,012)
8300
$ 400,800
$ 120,900
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
T500
$ 162,100.
$ 42,700
The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation
team concluded that $56,000 and $106,000 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:
Total
$ 562,900
163,600
520,412
$ 1,246,912
Manufacturing
Overhead
$ 206,092
153, 120
100, 200
61,000
$ 520,412
8300
90,900
78
1
NA
Activity
T500
62,900
270
RIM
1
NA
Total
153,800
348
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 Hi-Tek produced and sold 60,400 units of B300 at a price of $19 per unit and 12,700 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: Direct materials Direct labor Manufacturing overhead Cost of goods sold $ 1,642,900 1,246,912 395,988 590,000 $ (194,012) 8300 $ 400,800 $ 120,900 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 T500 $ 162,100. $ 42,700 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $56,000 and $106,000 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: Total $ 562,900 163,600 520,412 $ 1,246,912 Manufacturing Overhead $ 206,092 153, 120 100, 200 61,000 $ 520,412 8300 90,900 78 1 NA Activity T500 62,900 270 RIM 1 NA Total 153,800 348 2 NA
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