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Hi-Tek Manufacturing, Inc., makes two types of industrial component parts-the B300 and the T500. An absorption costing income
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Calculation of product margin under traditional system
B300 T500
Sales Revenue 1,270,500.00 504,000.00
Direct Material 400,600.00 162,800.00
Direct Labor 120,400.00 42,400.00
Overhead 367,680.74 129,482.26
Product Margin 381,819.26 169,317.74
Under ABC
B300 T500
Sales Revenue 1,270,500.00 504,000.00
Direct Material 400,600.00 162,800.00
Direct Labor 120,400.00 42,400.00
Overhead
Machining 120365 83258
Setups 33540 98900
Product Sustaining 50200 50200
Product Margin 545,395.00 66,442.00
Comparison
B300 T500
Margin under Traditional Costing 381,819.26 169,317.74
Margin under ABC Costing 545,395.00 66,442.00
Difference -163,575.74 102,875.74

=C4 1 Calculation of product margin under traditional system 2 B300 T500 3 Sales Revenue =60500*21 =12600*40 4 Direct Materia

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