Question

Che 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 I Hi-Tek Manufacturing Inc. Income Statement Sales $ 1,767,600 Cost of goods sold 1.212,086 Gross margin 535,514 Selling and administrative expenses 55e,eee Net operating loss $ (14,486) Book Hint rint Hi-Tek produced and sold 60,400 units of B300 at a price of $21 per unit and 12,800 units of T500 at a price of $39 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: erences 8300 $ 480,500 5 120, 300 T5ee $ 162,100 3 42,988 Direct materials Direct labor Manufacturing overhead Cost of goods sold Total $ 562,600 163,200 506, 286 $ 1.232,086 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $60,000 and $107.000 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

I am stumped on this one...any help would be great. Thanks.

Answer 1

Answer 1:
Estimated Manufacturing Overhead		506,286
Divided by: Estimated direct labor dollars		163,200
Predetermined overhead rate		$     3.10224	per direct labor dollar
	B300	T500	Total
Direct materials	400,500	162,100	562,600
Direct labor	120,300	42,900	163,200
Manufacturing overhead (Direct labor * overhead rate)	373,200	133,086	506,286
Total manufacturing cost	894,000	338,086	1,232,086
Units sold	60,400	12,800
Selling price	21	39
Sales revenues	1,268,400	499,200	1,767,600
Less: Total manufacturing cost	894,000	338,086	1,232,086
Product margin	374,400	161,114	535,514

Answer 2:
Activity Centers	Activity Costs	Divided by : Activity Level	Cost driver rate
Machining	$          202,426	152,200	$                      1.33
Setups	$          142,560	324	$                  440.00
Product-sustaining	$          100,800	2	$            50,400.00
Model	B300
Activity Centers	Cost driver rate	Multiply: Activity	Allocated cost
Machining	$                 1.33	90,200	$               119,966
Setups	$            440.00	74	$                  32,560
Product-sustaining	$      50,400.00	1	$                  50,400
B300			$               202,926
Model	T500
Activity Centers	Cost driver rate	Multiply: Activity	Allocated cost
Machining	$                 1.33	62,000	$                  82,460
Setups	$            440.00	250	$               110,000
Product-sustaining	$      50,400.00	1	$                  50,400
T500			$               242,860
	B300	T500	Total
Sales revenue	1,268,400	499,200	1,767,600
Less: costs
Direct materials	400,500	162,100	562,600
Direct labor	120,300	42,900	163,200
Advertising expense	60,000	107,000	167,000
Machining	119,966	82,460	202,426
Setups	32,560	110,000	142,560
Product-sustaining	50,400	50,400	100,800
Total cost	783,726	554,860	1,338,586
Product margin	484,674	(55,660)	429,014

Answer 3:
	B300	B300	T500	T500	Total
Activity-Based Costing System	Amount	%	Amount	%	Amount
Direct costs:
Direct materials	400,500	71.2%	162,100	28.8%	562,600
Direct labor	120,300	73.7%	42,900	26.3%	163,200
Advertising expense	60,000	35.9%	107,000	64.1%	167,000
Indirect costs:
Machining	119,966	59.3%	82,460	40.7%	202,426
Setups	&nbs Add a comment Know the answer? Add Answer to: I am stumped on this one...any help would be great. Thanks. Che Hi-Tek Manufacturing, Inc., makes... Your Answer: Post as a guest Your Name: What's your source? Earn Coins Coins can be redeemed for fabulous gifts. Log In Sign Up Post as anonymous Post Your Answer Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free. Similar Homework Help Questions 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. 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