need some help with this one, thanks Hi- Tek Manufacturing, Inc, makes two types
ID: 2557323 • Letter: N
Question
need some help with this one, thanks
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: Sales Cost of goods sold Gross margin Selling and administrative expenses600,eee Net operating loss 5 1,774,300 1,232,250 542,050 $(57,950) Tek produced and sold 60.300 units of B300 at a price of S21 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 plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company's two product lines is shown below Total 8308 T500 Direct materials Direct labor Manufacturing overhead Cost of goods sold 400,e0e 162,800 562,800 163,e00 506,450 s 120,400 42,600 s 1,232, The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $57000 and $106,000 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 Prey 6 of 6NextExplanation / Answer
1
Compute product Margins for the B300 and T500 under the company traditional costing system
PMOH RATE
Estimated total manufacturing cost/ Estimated direct labor
506450/163000
3.11
Particulars
B300
T500
TOTAL
Sales
1266300
508000
1774300
Direct Materials
400000
162000
562000
Direct Labor
120400
42600
163000
Manufacturing overhead applied
374089
132361
506450
Total manufacturing costs
894489
336961
1231450
r
Product Margin
371811
171039
542850
2
Compute product Margins for the B300 and T500 under the company Activity based costing system
B300
T500
TOTAL
Sales
1266300
508000
1774300
Direct Materials
400000
162000
562000
Direct labor
120400
42600
163000
Advertsing expense
57000
106000
163000
MOH assigned
Machine pool
126560
87920
214480
Setup pool
31570
98400
129970
product sustaining
50800
50800
101600
Total cost assigned
786330
547720
1334050
Product Margin (ABC)
479970
-39720
440250
Cost rate pools
Activity
Activity cost pool
Manufacturing overheads
B300
T500
TOTAL
COST RATE POOL
Machining (Machine hours)
214480
90400
62800
153200
1.4
Setups (setup per hours)
129970
77
240
317
410
Product sustaining (Number of products)
101600
1
1
2
50800
Other (organization sustaining costs)
60400
NA
NA
NA
NA
506450
3
Prepare a quantitave comparison of the traditional and activity based cost assignments
Particulars
B300
T500
TOTAL
Sales
1266300
508000
1774300
Direct Materials
400000
162000
562000
Direct Labor
120400
42600
163000
Manufacturing overhead applied
374089
132361
506450
Total manufacturing costs
894489
336961
1231450
Product Margin
371811
171039
542850
Selling and administrative
-600000
Net Operating costs
-57150
Compute product Margins for the B300 and T500 under the company Activity based costing system
B300
T500
TOTAL
Sales
1266300
508000
1774300
Direct Materials
400000
162000
562000
Direct labor
120400
42600
163000
Advertsing expense
57000
106000
163000
MOH assigned
Machine pool
126560
87920
214480
Setup pool
31570
98400
129970
product sustaining
50800
50800
101600
Total cost assigned
786330
547720
1334050
Product Margin (ABC)
479970
-39720
440250
Selling and administrative (in direct)
-600000
Organizational sustaing costs
-60400
-220150
Difference in product margins
-108159
210759
1
Compute product Margins for the B300 and T500 under the company traditional costing system
PMOH RATE
Estimated total manufacturing cost/ Estimated direct labor
506450/163000
3.11
Particulars
B300
T500
TOTAL
Sales
1266300
508000
1774300
Direct Materials
400000
162000
562000
Direct Labor
120400
42600
163000
Manufacturing overhead applied
374089
132361
506450
Total manufacturing costs
894489
336961
1231450
r
Product Margin
371811
171039
542850
2
Compute product Margins for the B300 and T500 under the company Activity based costing system
B300
T500
TOTAL
Sales
1266300
508000
1774300
Direct Materials
400000
162000
562000
Direct labor
120400
42600
163000
Advertsing expense
57000
106000
163000
MOH assigned
Machine pool
126560
87920
214480
Setup pool
31570
98400
129970
product sustaining
50800
50800
101600
Total cost assigned
786330
547720
1334050
Product Margin (ABC)
479970
-39720
440250
Cost rate pools
Activity
Activity cost pool
Manufacturing overheads
B300
T500
TOTAL
COST RATE POOL
Machining (Machine hours)
214480
90400
62800
153200
1.4
Setups (setup per hours)
129970
77
240
317
410
Product sustaining (Number of products)
101600
1
1
2
50800
Other (organization sustaining costs)
60400
NA
NA
NA
NA
506450
3
Prepare a quantitave comparison of the traditional and activity based cost assignments
Particulars
B300
T500
TOTAL
Sales
1266300
508000
1774300
Direct Materials
400000
162000
562000
Direct Labor
120400
42600
163000
Manufacturing overhead applied
374089
132361
506450
Total manufacturing costs
894489
336961
1231450
Product Margin
371811
171039
542850
Selling and administrative
-600000
Net Operating costs
-57150
Compute product Margins for the B300 and T500 under the company Activity based costing system
B300
T500
TOTAL
Sales
1266300
508000
1774300
Direct Materials
400000
162000
562000
Direct labor
120400
42600
163000
Advertsing expense
57000
106000
163000
MOH assigned
Machine pool
126560
87920
214480
Setup pool
31570
98400
129970
product sustaining
50800
50800
101600
Total cost assigned
786330
547720
1334050
Product Margin (ABC)
479970
-39720
440250
Selling and administrative (in direct)
-600000
Organizational sustaing costs
-60400
-220150
Difference in product margins
-108159
210759
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