Hi-Tek Manufacturing, Inc., makes two types of industrial component .docx - Hi-Tek Manufacturing Inc makes two types of industrial component parts \ufffd

Hi-Tek Manufacturing, Inc., makes two types of industrial component .docx

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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 produced and sold 60,400 units of B300 at a price of $21 per unit and 12,500 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: The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek s ABC implementation team concluded that $54,000 and $103,000 of the company s advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling
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Unformatted text preview: and administrative expenses was organization-sustaining in nature. The ABC team also distributed the company s � manufacturing overhead to four activities as shown below: 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. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place and and other answers to the nearest whole dollar amounts.)Hi-Tek Manufacturing Inc. Income StatementSales$1,768,400Cost of goods sold1,232,611Gross margin535,789Selling and administrative expenses560,000Net operating loss$(24,211)...
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  • Spring '08
  • BOYLAN

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