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 $ 1,649,900
Cost of goods sold 1,222,294
Gross margin 427,606
Selling and administrative expenses 560,000
Net operating loss $ (132,394 )
Hi-Tek produced and sold 60,100 units of B300 at a price of $19 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:
B300 T500 Total
Direct materials $ 400,100 $
162,700 $ 562,800
Direct labor $ 120,100 $ 42,900
163,000
Manufacturing overhead 496,494
Cost of goods sold $ 1,222,294
The company has created an activity-based costing system to
evaluate the profitability of its products. Hi-Tek’s ABC
implementation team concluded that $52,000 and $101,000 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
Overhead Activity
Activity Cost Pool (and Activity Measure) B300 T500
Total
Machining (machine-hours) $ 200,954 90,500 62,900
153,400
Setups (setup hours) 133,140 77 240 317
Product-sustaining (number of products) 101,600 1 1
2
Other (organization-sustaining costs) 60,800 NA NA NA
Total manufacturing overhead cost $ 496,494
Required:
1. Compute the product margins for the B300 and T500 under the
company’s traditional costing system.
2. Compute the product margins for B300 and T500 under the
activity-based costing system.
3. Prepare a quantitative comparison of the traditional and
activity-based cost assignments.
Hi-Tek Manufacturing, Inc., makes two types of industrial component parts—the B300 and the T500. An absorption...
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 $ 1,693,400 Cost of goods sold 1,255,186 Gross margin 438,214 Selling and administrative expenses 570,000 Net operating loss $ (131,786 ) Hi-Tek produced and sold 60,100 units of B300 at a price of $20 per unit and 12,600 units of T500 at a price of $39 per unit....
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 $ 1,772,400 Cost of goods sold 1,242,484 Gross margin 529,916 Selling and administrative expenses 610,000 Net operating loss $ (80,084 ) Hi-Tek produced and sold 60,400 units of B300 at a price of $21 per unit and 12,600 units of T500 at a price of $40 per unit....
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 $ 1,774,300 Cost of goods sold 1,251,130 Gross margin 523,170 Selling and administrative expenses 630,000 Net operating loss $ (106,830 ) Hi-Tek produced and sold 60,300 units of B300 at a price of $21 per unit and 12,700 units of T500 at a price of $40 per unit....
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 $ 1,655,600 Cost of goods sold 1,233,735 Gross margin 421,865 Selling and administrative expenses 600,000 Net operating loss $ (178,135 ) Hi-Tek produced and sold 60,400 units of B300 at a price of $19 per unit and 12,700 units of T500 at a price of $40 per unit....
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 and 12,700 units of T500 at a price of $40 per unit....
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 $ 1,691,500 Cost of goods sold 1,214,870 Gross margin 476,630 Selling and administrative expenses 580,000 Net operating loss $ (103,370 ) Hi-Tek produced and sold 60,200 units of B300 at a price of $20 per unit and 12,500 units of T500 at a price of $39 per unit....
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 $ 1,649,900 Cost of goods sold 1,254,430 Gross margin 395,470 Selling and administrative expenses 560,000 Net operating loss $ (164,530 ) Hi-Tek produced and sold 60,100 units of B300 at a price of $19 per unit and 12,700 units of T500 at a price of $40 per unit....
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 $ 1,705,200 Cost of goods sold 1,242,098 Gross margin 463,102 Selling and administrative expenses 610,000 Net operating loss $ (146,898 ) Hi-Tek produced and sold 60,300 units of B300 at a price of $20 per unit and 12,800 units of T500 at a price of $39 per unit....
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 $ 1,693,400 Cost of goods sold 1,227,800 Gross margin 465,600 Selling and administrative expenses 590,000 Net operating loss $ (124,400 ) Hi-Tek produced and sold 60,100 units of B300 at a price of $20 per unit and 12,600 units of T500 at a price of $39 per unit....
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 $ 1,699,400 Cost of goods sold 1,224,856 Gross margin 474,544 Selling and administrative expenses 630,000 Net operating loss $ (155,456 ) Hi-Tek produced and sold 60,400 units of B300 at a price of $20 per unit and 12,600 units of T500 at a price of $39 per unit....