Solution 1:
Predetermined overhead rate = Estimated overhead / Estimated direct labor cost = $521,160 / $163,700 = $3.18 per direct labor dollar
Computation of Product Margin - Traditional Costing System | |||
Particulars | B300 | T500 | Total |
Sales (B300 - 60,100*$20, T500 - 12700*$39) | $1,202,000 | $495,300 | $1,697,300 |
Direct material | $400,500 | $162,200 | $562,700 |
Direct labor | $120,900 | $42,800 | $163,700 |
Manufacturing overhead (Direct labor * $3.18) | $384,462 | $136,104 | $520,566 |
Product Margin | $296,138 | $154,196 | $450,334 |
Solution 2:
Determination of activity rate for each activity & allocation of overhead | ||||||||
Activity | Estimated Overhead Cost | Activity Base | Usage of Activity Base | Activity Rate | B300 | T500 | ||
Usage | Allocated Costs | Usage | Allocated Costs | |||||
Machining | $206,280.00 | Machine hours | 152800 | $1.35 | 90500 | $122,175.00 | 62300 | $84,105.00 |
Setups | $152,680.00 | Setup hours | 347 | $440.00 | 77 | $33,880.00 | 270 | $118,800.00 |
Product sustaining | $101,800.00 | Number of products | 2 | $50,900.00 | 1 | $50,900.00 | 1 | $50,900.00 |
Other | $60,400.00 | No allocation | ||||||
Total | $521,160.00 | $206,955.00 | $253,805.00 |
Computation of Product Margin - Activity based Costing System | |||
Particulars | B300 | T500 | Total |
Sales (B300 - 60,100*$20, T500 - 12700*$39) | $1,202,000 | $495,300 | $1,697,300 |
Direct material | $400,500 | $162,200 | $562,700 |
Direct labor | $120,900 | $42,800 | $163,700 |
Allocated Manufacturing overhead | $206,955.00 | $253,805.00 | $460,760 |
Advertising Expense | $57,000.00 | $101,000.00 | $158,000.00 |
Product Margin | $416,645.00 | -$64,505.00 | $352,140.00 |
Solution 3:
Quantity comparison of traditional cost assignment | |||||
Particulars | B300 | T500 | Total | ||
Amount | % of total Amount | Amount | % of total Amount | Amount | |
Direct Material Cost | $400,500 | 71.2% | $162,200 | 28.8% | $562,700 |
Direct Labor Cost | $120,900 | 73.9% | $42,800 | 26.1% | $163,700 |
Manufacturing Overhead cost | $384,462 | 73.9% | $136,104 | 26.1% | $520,566 |
Total cost assigned to products | $905,862 | $341,104 | $1,246,966 | ||
Total cost not assigned to product: | |||||
Selling and adminstrative Expenses | $590,000.00 | ||||
Total Cost | $1,836,966 |
Quantity comparison of Activity Based cost assignment | |||||
Particulars | B300 | T500 | Total | ||
Amount | % of total Amount | Amount | % of total Amount | Amount | |
Direct Cost: | |||||
Material Cost | $400,500 | 71.2% | $162,200 | 28.8% | $562,700 |
Labor Cost | $120,900 | 73.9% | $42,800 | 26.1% | $163,700 |
Advertising Expense | $57,000 | 36.1% | $101,000 | 63.9% | $158,000 |
Indirect Cost: | |||||
Machining | $122,175 | 59.2% | $84,105 | 40.8% | $206,280 |
Setups | $33,880 | 22.2% | $118,800 | 77.8% | $152,680 |
Product sustaining | $50,900 | 50.0% | $50,900 | 50.0% | $101,800 |
Total Cost Assigned to Products | $785,355 | $559,805 | $1,345,160 | ||
Cost not assigned to products: | |||||
Manufacturing | $60,400 | ||||
Selling and administrative | $432,000 | ||||
Total Cost | $1,837,560 |
Problem 7-16 Comparing Traditional and Activity-Based Product Margins (L07-1, LO7-3, L07-4, LO7-5) Hi-Tek Manufacturing, Inc., makes...
Problem 7-16 Comparing Traditional and Activity-Based Product Margins [LO7-1, L07-3, LO7-4, LO7-5) 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 boints $ Hi-Tek Manufacturing Inc. Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss 1,716.00 1,212,566 503.434 560.000 (56,566) Hi-Tek produced and sold 60,200 units of B300 at a price of $20 per unit and...
Problem 7-16 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4, LO7-5] 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: Hi-Tek Manufacturing Inc. Income Statement Sales 1,749,600 1,233,208 516,392 590,000 (73,608) Cost of goods sold Gross margin Selling and administrative expenses Net operating loss Hi-Tek produced and sold 60,100 units of B300 at a price of $21 per unit and 12,500 units...
Problem 7-16 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4, LO7-5) 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: Hi-Tek Manufacturing Inc. Income Statement Sales $ 1,697,400 Cost of goods sold 1,230,193 Gross margin 467,207 Selling and administrative expenses 640,000 net operating loss $ (172,793) Hi-Tek produced and sold 60,300 units of B300 at a price of $20 per unit and...
Problem 7-16 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4, LO7-5] 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: Hi-Tek Manufacturing Inc. Income Statement Sales $ 1,708,000 Cost of goods sold 1,228,693 Gross margin 479,307 Selling and administrative expenses 550,000 Net operating loss $ (70,693 ) Hi-Tek produced and sold 60,000 units of B300 at a price of $20 per unit...
Problem 7-16 Comparing Traditional and Activity-Based Product Margins (LO7-1, LO7-3, LO7-4, LO7-5) 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: Hi-Tek Manufacturing Inc. Income Statement Sales $1,709, 200 Cost of goods sold 1,233,722 Gross margin 475,478 Selling and administrative expenses 650,000 Net operating loss $ (174,522) Hi-Tek produced and sold 60.500 units of B300 at a price of $20 per unit and...
1 Problem 7-16 Comparing Traditional and Activity-Based Product Margins (LO7-1, LO7-3, LO7-4, LO7-5) 5 points 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: eBook Hi-Tek Manufacturing Inc. Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss $1,714,000 1,244,230 469, 770 550,000 $ (80,230) Print References Hi-Tek produced and sold 60,300 units of B300 at a...
1 Problem 7-16 Comparing Traditional and Activity-Based Product Margins (LO7-1, LO7-3, LO7-4, LO7-5) 5 points 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: eBook Hi-Tek Manufacturing Inc. Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss $1,714,000 1,244,230 469, 770 550,000 $ (80,230) Print References Hi-Tek produced and sold 60,300 units of B300 at a...
Chapter Seven Problems (10 pts) Problem 7-16 Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, L07-4, LO7-5) Hi-Tek Manufacturing, Inc., makes two types of industrial component parts--the 8300 and the 1500. An absorption costing income statement for the most recent period is shown $ Hi-Tek Manufacturing Inc. Income Statement Sales cost of goods sold Gross margin Selling and administrative expenses Net operating less 1,716,000 1,212,566 5e3, 434 560.000 (56,566) $ Hi-Tek produced and sold 60,200 units of B300 at a...
Thanks for your help and time!!! Problem 7-16 Comparing Traditional and Activity-Based Product Margins (L07-1, LO7-3, L07-4, L07-5) 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: Hi-Tel Manufacturint Inc. Income Statement Cost of goods sold GIOS margin Selling and administrative expenses Net operating loss $ 1,695,500 1,214,024 181,476 580,000 Hi-Tek produced and sold 60,400 units of B300 at a price of $20...
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: Hi-Tek Manufacturing Inc. Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss $ 1,751,400 1,206,088 545, 312 630,000 $ (84,688) Hi-Tek produced and sold 60,000 units of B300 at a price of $21 per unit and 12,600 units of T500 at a price of $39 per unit....