, 60% , Wed 5:01 Edit View History Bookmarks People Window Help ements- MGMT-300
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, 60% , Wed 5:01 Edit View History Bookmarks People Window Help ements- MGMT-300xConnect re https: 7 Homework , connect.html Help 1,649,700 Cost ot goods sold margia selling and adninistrative expenses30,00B Net operating loss Hi-Tek produced and sold 60,300 units of 8300 at a price of $19 per unit and 12,600 units of T500 at a price of $40 per unit. The company's treditional 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 ireet labor iag overhesd The company has crested an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation eam concluded that $51000 and $106.000 of the company's advertising expenses could be directly traced to 8300 and T500 distributed the companys manufacturing overhead to four activities as shown belowExplanation / Answer
Answer 1. Calculation of Product Margin Under Traditional Costing System B300 T500 Total Sales in Units 60,300 12,600 SP per Unit 19 40 Sales in $ 1,145,700 504,000 1,649,700 Less: Costs Direct Materials 400,200 162,600 562,800 Direct Labor 120,200 42,600 162,800 Manufacturing Overhead 368,714 130,676 499,390 Total Maufacturing Cost 889,114 335,876 1,224,990 Product Margin 256,586 168,124 424,710 Predetermined Overhead Rate = $499,390 (Total MOH) / $162,800 (Total Direct Labour $) Predetermined Overhead Rate = 306.75% of DLC (Approx.) Answer 2. Calculation of Activity Rate Total cost Allocation Base Allocation Rate Machining 203,490 153,000 Mach. Hrs 1.33 per mach. Hr Setups 133,600 334 Setup Hrs 400.00 per setup hr. Product Sustaining 101,800 2 Production 50,900.00 per product Other 60,500 NA NA Total Overhead 499,390 Assigning Overhead Cost to Product Model Using ABC Method Activity Based Overhead Rate B300 T500 Cost Driver Incurred OH Allocated Cost Driver Incurred OH Allocated Machining 1.33 per mach. Hr 90,500 Mach. Hrs 120,365.00 62,500 Mach. Hrs 83,125.00 Setups 400.00 per setup hr. 74 Setup Hrs 29,600.00 260 Setup Hrs 104,000.00 Product Sustaining 50,900.00 per product 1 Production 50,900.00 1 Production 50,900.00 Total Overhead 200,865 238,025 Calculation of Product Margin Under ABC Costing B300 T500 Total Sales in Units 60,300 12,600 SP per Unit 19 40 Sales in $ 1,145,700 504,000 1,649,700 Less: Costs Direct Materials 400,200 162,600 562,800 Direct Labor 120,200 42,600 162,800 Advertising Costs 51,000 106,000 157,000 Indirect Costs: Machining 120,365 83,125 203,490 Setups 29,600 104,000 133,600 Product Sustaining 50,900 50,900 101,800 Total costs assigned to products 772,265 549,225 1,321,490 Product Margin 373,435 (45,225) 328,210 Answer 3. B300 T500 Total Amount Amount % of Total amount Amount % of Total amount Traditional Cost System Direct Materials 400,200 71.11% 162,600 28.89% 562,800 Direct Labor 120,200 73.83% 42,600 26.17% 162,800 Manufacturing Overhead 368,714 73.83% 130,676 26.17% 499,390 Total cost assigned to products 889,114 72.58% 335,876 27.42% 1,224,990 Selling & Admn. Exp. 630,000 Total Costs 1,854,990 B300 T500 Total Amount Amount % of Total amount Amount % of Total amount Activity Based Costing system Direct Materials 400,200 71.11% 162,600 28.89% 562,800 Direct Labor 120,200 73.83% 42,600 26.17% 162,800 Advertising Costs 51,000 32.48% 106,000 67.52% 157,000 Indirect Costs: Machining 120,365 59.15% 83,125 40.85% 203,490 Setups 29,600 22.16% 104,000 77.84% 133,600 Product Sustaining 50,900 50.00% 50,900 50.00% 101,800 Total costs assigned to products 772,265 58.44% 549,225 41.56% 1,321,490 Costs not assigned to products Selling & Admn. Exp. 473,000 Other Costs 60,500 Total Costs 1,854,990
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