Hi-Tek Manufacturing Inc. makes two types of industrial component parts—the B300
ID: 2417763 • Letter: H
Question
Hi-Tek Manufacturing Inc. makes two types of industrial component parts—the B300 and the T500.
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 below: Hi-Tek Manufacturing Inc. Income Statement Sales Cost of goods sold $1,702,000 1,230,372 Gross margin Selling and administrative expenses 471,628 600,000 Net operating loss $ (128,372) Hi-Tek produced and sold 60,100 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:Explanation / Answer
Answer 1. Statement Showing Product Margin Under Traditional Costing System B300 T500 Total Sales in Unit 60100 12500 SP per Unit $20 $40 Sales in $ 1,202,000 500,000 1,702,000 Less: Cost of Goods Sold Direct material 400,100 162,200 562,300 Direct Labour 120,800 42,800 163,600 Manufacturing Overhead 372,495 131,977 504,472 Cost of goods Sold 893,395 336,977 1,230,372 Gross Margin 308,605 163,023 471,628 Traceable Selling & Adm. Exp. 52,000 106,000 158,000 Product Margin 256,605 57,023 313,628 Non Traceable Selling & Adm Exp. 442,000 Net Operating Profit / (Loss) (128,372) Answer 2. Activity Cost Pool Estimated Overhead Expected use of Cost Drivers Activity-Based Overhead rate Machining 200,692 153200 1.31 per machine hour Setups 142,380 339 420.00 per setup hour Product Sustaining 100,800 2 50,400.00 per product Total Overhead 443,872 Alocation of Overhead Cost Under ABC Particulars Model Total B300 T500 Machining 118,817 81,875 200,692 Setups 33,180 109,200 142,380 Product Sustaining 50,400 50,400 100,800 Total 202,397 241,475 443,872 Statement Showing Product Margin Under ABC B300 T500 Total Sales in Unit 60100 12500 SP per Unit $20 $40 Sales in $ 1,202,000 500,000 1,702,000 Less: Cost of Goods Sold Direct material 400,100 162,200 562,300 Direct Labour 120,800 42,800 163,600 Manufacturing Overhead 202,397 241,475 443,872 Cost of goods Sold 723,297 446,475 1,169,772 Gross Margin 478,703 53,525 532,228 Traceable Selling & Adm. Exp. 52,000 106,000 158,000 Product Margin 426,703 (52,475) 374,228 Non Traceable Selling & Adm Exp. 442,000 Non Traceable Other Manufacturing Exp. 60,600 Net Operating Profit / (Loss) (128,372) Answer 3. B300 T500 Total Amt % of Total Amt. % of Total Amt. Amount Traditional Cost System Direct material 400,100 71.15 162,200 28.85 562,300 Direct Labour 120,800 73.84 42,800 26.16 163,600 Manufacturing Overhead 372,495 73.84 131,977 26.16 504,472 Traceable Selling & Adm. Exp. 52,000 32.91 106,000 67.09 158,000 Total Cost Assigned to product 945,395 442,977 1,388,372 Non Traceable Selling & Adm Exp. 442,000 Total Cost 1,830,372 B300 T500 Total Amt % of Total Amt. % of Total Amt. Amount Activity Based Costing Direct Costs Direct material 400,100 71.15 162,200 28.85 562,300 Direct Labour 120,800 73.84 42,800 26.16 163,600 Indirect Costs Machining 118817 59.20 81875 40.80 200,692 Setups 33180 23.30 109200 76.70 142,380 Product Sustaining 50400 50.00 50400 50.00 100,800 Traceable Selling & Adm. Exp. 52,000 32.91 106,000 67.09 158,000 Total Cost assigned to products 775,297 552,475 1,327,772 Costs not assigned to products Non Traceable Selling & Adm Exp. 442,000 Non Traceable Other Manufacturing Exp. 60,600 Net Operating Profit / (Loss) 1,830,372
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.