Solution 1:
Predetermined overhead rate = Estimated overhead / Estimated direct labor cost = $508,222 / $162,600 = $3.13 per direct labor dollar
Computation of Product Margin - Traditional Costing System | |||
Particulars | B300 | T500 | Total |
Sales (B300 - 60,500*$20, T500 - 12800*$39) | $1,210,000 | $499,200 | $1,709,200 |
Direct material | $400,100 | $162,800 | $562,900 |
Direct labor | $120,400 | $42,200 | $162,600 |
Manufacturing overhead (Direct labor * $3.13) | $376,852 | $132,086 | $508,938 |
Product Margin | $312,648 | $162,114 | $474,762 |
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 | $211,002.00 | Machine hours | 152900 | $1.38 | 90400 | $124,752.00 | 62500 | $86,250.00 |
Setups | $136,120.00 | Setup hours | 332 | $410.00 | 72 | $29,520.00 | 260 | $106,600.00 |
Product sustaining | $100,200.00 | Number of products | 2 | $50,100.00 | 1 | $50,100.00 | 1 | $50,100.00 |
Other | $60,900.00 | No allocation | ||||||
Total | $508,222.00 | $204,372.00 | $242,950.00 |
Computation of Product Margin - Activity based Costing System | |||
Particulars | B300 | T500 | Total |
Sales (B300 - 60,500*$20, T500 - 12800*$39) | $1,210,000 | $499,200 | $1,709,200 |
Direct material | $400,100 | $162,800 | $562,900 |
Direct labor | $120,400 | $42,200 | $162,600 |
Allocated Manufacturing overhead | $204,372.00 | $242,950.00 | $447,322 |
Advertising Expense | $55,000.00 | $101,000.00 | $156,000.00 |
Product Margin | $430,128.00 | -$49,750.00 | $380,378.00 |
Solution 3:
Quantity comparison of traditional cost assignment | |||||
Particulars | B300 | T500 | Total | ||
Amount | % of total Amount | Amount | % of total Amount | Amount | |
Direct Material Cost | $400,100 | 71.1% | $162,800 | 28.9% | $562,900 |
Direct Labor Cost | $120,400 | 74.0% | $42,200 | 26.0% | $162,600 |
Manufacturing Overhead cost | $376,852 | 74.0% | $132,086 | 26.0% | $508,938 |
Total cost assigned to products | $897,352 | $337,086 | $1,234,438 | ||
Total cost not assigned to product: | |||||
Selling and adminstrative Expenses | $650,000.00 | ||||
Total Cost | $1,884,438 |
Quantity comparison of Activity Based cost assignment | |||||
Particulars | B300 | T500 | Total | ||
Amount | % of total Amount | Amount | % of total Amount | Amount | |
Direct Cost: | |||||
Material Cost | $400,100 | 71.1% | $162,800 | 28.9% | $562,900 |
Labor Cost | $120,400 | 74.0% | $42,200 | 26.0% | $162,600 |
Advertising Expense | $55,000 | 35.3% | $101,000 | 64.7% | $156,000 |
Indirect Cost: | |||||
Machining | $124,752 | 59.1% | $86,250 | 40.9% | $211,002 |
Setups | $29,520 | 21.7% | $106,600 | 78.3% | $136,120 |
Product sustaining | $50,100 | 50.0% | $50,100 | 50.0% | $100,200 |
Total Cost Assigned to Products | $779,872 | $548,950 | $1,328,822 | ||
Cost not assigned to products: | |||||
Manufacturing | $60,900 | ||||
Selling and administrative | $494,000 | ||||
Total Cost | $1,883,722 |
Problem 7-16 Comparing Traditional and Activity-Based Product Margins (LO7-1, LO7-3, LO7-4, LO7-5) Hi-Tek Manufacturing, Inc., makes...
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, 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 (L07-1, LO7-3, L07-4, 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 Cost of goods sold Gross margin Selling and administrative expenses Net operating loss 1,697,300 1,247,560 449,740 590,000 (140.260) Hi-Tek produced and sold 60,100 units of B300 at a price of $20 per unit and 12,700...
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...
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...
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...
PROBLEM 7-17 Comparing Traditional and Activity-Based PRODUCE MOTS VALVULNU 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 below: Hi-Tek Manufacturing Inc. Income Statement Sales ....... Cost of goods sold ......... Gross margin .. Selling and administrative expenses Net operating loss... $2,100,000 1,600,000 500,000 550,000 $ (50,000) Hi-Tek produced and sold 70.00 af a price of $40 per unit. oduced and sold 70,000...