value: 4.75 points Hi-Tek Manufacturing Inc. makes two types of industrial compo

Question

value: 4.75 points Hi-Tek Manufacturing Inc. makes two types of industrial component parts-the 8300 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 Gross margin Selling and administrative expenses Net operating loss $ 1,716,000 1,239.344 476.656 73,344 Hi-Tek produced and sold 60,400 units of B300 at a price of $20 per unit and 12,700 units of T500 at a price of $40 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plantide 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 S 400,600 S 162,700 $ 563,300 Total Direct materials Direct labor Manufacturing overhead Cost of goods sold S 120,700 42,600 163,300 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $55,000 and $102,000 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 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 T500 Total Overhead S 203,224 147,920 101,400 90,600 62.200 270 152,800 344 74 NA NA NA 12,744

Explanation / Answer

Percentage should be calculated for line item wise.

B300 T500 Total % of % of Amount Total Amount Amount Total Amount Amount Direct materials $4,00,600 71.1% $1,62,700 28.9% $5,63,300 Direct labor $1,20,700 73.9% $42,600 26.1% $1,63,300 Manufacturing overhead applied $3,78,985 73.9% $1,33,759 26.1% $5,12,744 Total manufacturing costs $9,00,285 $3,39,059 $12,39,344 Selling & administrative 5,50,000 Total Costs $17,89,344 Note: Total costs accounted for $17,89,344 B300 T500 Total Amount % of Amount % of Amount Total Amount Amount Total Amount Amount Direct materials $4,00,600 71.1% $1,62,700 28.9% $5,63,300 Direct labor $1,20,700 73.9% $42,600 26.1% $1,63,300 Advertising expense $55,000 35.0% $1,02,000 65.0% $1,57,000 Mfg. Overhead assigned      Machining pool $1,20,498 59.3% $82,726 40.7% $2,03,224      Setup pool $31,820 21.5% $1,16,100 78.5% $1,47,920      Product sustaining $50,700 50.0% $50,700 50.0% $1,01,400 Total costs assigned $7,79,318 $5,56,826 $13,36,144 Selling & Administrative (Indirect) 3,93,000 Organizational Sustaining Costs 60,200 Total Costs $17,89,344

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