H-Tex Manfacturing Ine makes wo types most recent period is shown below of indus

Question

H-Tex Manfacturing Ine makes wo types most recent period is shown below of indusanial component parts-the B300 and te T500 An abscrption costing noome statement for the 5 1,633400 Coat of goods sold Seling and admnsraive expenses Hi-Tek produced and soid 60,100 units of 8300 at a prica nformation relating to the cempany's two product ines is shown below o $20 per unt and 12.600 unts of Tsco at a price of $39 per unit. The campany's traditional alacas mauacturirg ovethead to predudts using a plartwise overhedddrecd lacer dola 400, 1o0 162600 562,700 Con! of goods sol . ??, Tek's ABC implementasan learn The company has created an actvity-based costing system to evakuate the profitablity of ts products. Hi-T expenses coud be directy traced to B300 and T500, respectively. The remainder of the seling . The ABC team also distributed the company's manufacturing overhead to four and administrative expenses wis orpanization-sustaining in nature hown below Actiety Cost Puol (and Actiety Meiure) Machining im aetun 5 213,782 00,900 62,800 153,800 number of products) Total manufacturing overhead cost Required 1. Compute the product margins tor te B300 and T500 under the company's traditional costing system. (Do not round your overhead rate. Round your other intermediate and final answers to the nearest whole number.) Tetal Product magin 2. Compute the product margins for 8300 and T500 under the acsivity-based costing system (Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal placea) Product margin 3. Prepare a quantitative comparison of the radsonal and actvity-based oost assignments. (Do not round your overhead rate. Round your other intermediate ealculations and final answers to the nearest whole number. Round your "Percantage" anawer to 1 declmal place. (e. .1234 should be entered as 12.3

Explanation / Answer

Part 1)

The product margins under traditional costing system are calculated as below:

Predetermined Manufacturing Overhead = Estimated Manufacturing Overheads/Total Direct Labor Cost = 527,132/163,400 = $3.2260

Now, we can calculate product margins with the use of following table:

____

Part 2)

Step 1: Calculate Activity Rates

The activity rates are determined as follows:

____

Step 2: Calculate Product Margin Under Activity Based Costing

The product margin for each product under activity based costing is calculated as follows:

____

Part 3)

The quantitative comparison is prepared as below:

B300 T500 Total Sales Revenue 1,202,000 (60,100*20) 491,400 (12,600*39) 1,693,400 Less Direct Materials 400,100 162,600 562,700 Direct Labor 120,700 42,700 163,400 Manufacturing Overhead (Direct Labor*Predetermined Overhead Rate) 389,381 137,751 527,132 Product Margin $291,819 $148,349 $440,168

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