Hi-Tek Manufacturing, Inc., makes two types of industrial component parts-the B300 and the T500. An absorption costing incomestatement for the most recent period is shown:Hi-Tek Manufacturing Inc.Income Statement$ 1,714,0001,237,202476,798SalesCost of goods soldGross marginSelling and administrative expenses610,000Net operating loss$(133,202)Hi-Tek produced and sold 60,300 units of B300 at a price of $20 per unit and 12,700 units of T500 at a price of $40 per unit. Thecompany's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labordollars as the allocation base. Additional information relating to the company's two product lines is shown below:B300T500Total$ 400,800$ 120,100Direct materials$ 162,500$563,300162,600511,302Direct labor$ 42,500Manufacturing overheadCost of goods sold$ 1,237,202 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementationteam concluded that $52,000 and $108,000 of the company's advertising expenses could be directly traced to B300 and T500,respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team alsodistributed the company's manufacturing overhead to four activities as shown below:ManufacturingActivityTotalActivity Cost Pool (and Activity Measure)Machining (machine-hours)Setups (setup hours)Product-sustaining (number of products)Other (organization-sustaining costs)OverheadB300T500$ 204,752144,050102,00060,50090,20062,600152,80075260335112NANANATotal manufacturing overhead cost$ 511,302Required: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.

Name: Hi-Tek Manufacturing, Inc., makes two types of industrial component p
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: Hi-Tek Manufacturing, Inc., makes two types of industrial component parts-the B300 and the T500. An absorption costing incomestatement for the most recent period is shown:Hi-Tek Manufacturing Inc.Income Statement$ 1,714,0001,237,202476,798SalesCost