Info in imagesRequired: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. 1. 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.) B300T500TotalProduct margin $02. 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.) B300T500TotalProduct margin $03. Prepare a quantitative comparison of the traditional and activity-based cost assignments. (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.) Format in attached image В300T500Total% of% ofAmountAmountAmountTraditional Cost System%%%Total cost assigned to products$$Total costB300T500Total% of% ofAmountTotal AmountAmountTotal AmountAmountActivity-Based Costing SystemDirect costs:%Indirect costs:%%%%%Total cost assigned to productsCosts not assigned to products:%24%24 Hi-Tek Manufacturing, Inc., makes two types of industrial component parts-the B300 and the T500. An absorption costing incomestatement for the most recent period is shown:Hi-Tek Manufacturing Inc.Income Statement$ 1,714,0001,246,844467,156SalesCost of goods soldGross marginSelling and administrative expenses590,000(122,844)Net operating loss$4Hi-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 $40 per unit. Thecompany's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labordollars as the allocation base. Additional information relating to the company's two product lines is shown below:B300T500Total$ 162,100$ 400,100$ 120, 200562, 200162,200522,444Direct materialsDirect labor$42,000Manufacturing overheadCost of goods sold$ 1,246,844The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementationteam concluded that $53,000 and $109,000 of the company's advertising expenses could be directly traced to B300 and T500,respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team alsodistributed the company's manufacturing overhead to four activities as shown below:ManufacturingActivityActivity Cost Pool (and Activity Measure)Machining (machine-hours)Setups (setup hours)Product-sustaining (number of products)Other (organization-sustaining costs)OverheadB300Т500Total$ 209,88491,00062, 200153,200150,060101,600762903661160,900$ 522,444NANANATotal manufacturing overhead cost

Traditional costing system: It is a method of allocation of overhead to the products. Under this…

Answered: Info in images Required: 1. Compute…

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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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.

1. 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.)

	B300	T500	Total
Product margin			$0

2. 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 margin			$0

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. (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.)

Format in attached image

В300
T500
Total
% of
% of
Amount
Amount
Amount
Traditional Cost System
%
%
%
Total cost assigned to products
$
$
Total cost
B300
T500
Total
% of
% of
Amount
Total Amount
Amount
Total Amount
Amount
Activity-Based Costing System
Direct costs:
%
Indirect costs:
%
%
%
%
%
Total cost assigned to products
Costs not assigned to products:
%24
%24

Hi-Tek Manufacturing, Inc., 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 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
$4
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
$ 162,100
$ 400,100
$ 120, 200
562, 200
162,200
522,444
Direct materials
Direct labor
$
42,000
Manufacturing overhead
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
91,000
62, 200
153,200
150,060
101,600
76
290
366
1
1
60,900
$ 522,444
NA
NA
NA
Total manufacturing overhead cost

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