1 Required 1 Required 2 Required 3Prepare a quantitative comparison of the traditional and activity-based cost assignments.Note: Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place and and other answers to thenearest whole dollar amounts.Traditional Cost SystemTotal cost assigned to productsTotal costActivity-Based Costing SystemDirect costs:Indirect costs:Total cost assigned to productsCosts not assigned to products:Total costSSAmountAmountB3000B300% of% ofTotalAmount$$T500AmountAmount0T500% of% ofTotalAmountTotal AmountTotal Amount$000 Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts-the B300 and the T500. An absorption costingIncome statement for the most recent period is shown:Hi-Tek Manufacturing IncorporatedIncome StatementSalesCost of goods soldGross marginSelling and administrative expensesNet operating lossDirect materialsDirect laborHi-Tek produced and sold 60,200 units of 8300 at a price of $21 per unit and 12,600 units of T500 at a price of $39 per unit. Thecompany's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labordollars as the allocation base. Additional Information relating to the company's two product lines is shown below:Manufacturing overheadCost of goods soldActivity Cast Pool (and Activity Measure)Machining (machine-hours)Setups (setup hours)Product-sustaining (number of products)Other (organization-sustaining costs)Total manufacturing overhead cost$ 1,755,6001,254,207The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementationteam concluded that $51,000 and $108,000 of the company's advertising expenses could be directly traced to 5300 and T500,respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team alsodistributed the company's manufacturing overhead to four activities as shown below:Required 1 Required 2 Required 3581.303680,000$ (98,697)Product margin8300$ 400,200$ 120,100B300T580$ 162,000$ 42,800Complete this question by entering your answers in the tabs below.T600ManufacturingOverhead$288,377157,528181,60060,800$ 528,297Total$ 563,100162,900528,297$ 1,254,297S90,18078Required: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.Total1NAActivity150062,000Compute the product margins for the 8300 and T500 under the company's traditional costing system.Note: Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.2881NATotal152,1803582NA

Traditional costing system allocated the overhead on the basis of some plat wise, company wise or…

Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts-the 5300 and the T500. An absorption costing Income statement for the most recent period is shown: Hi-Tek Manufacturing Incorporated Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Not operating loss Hi-Tek produced and sold 60,200 units of 5300 at a price of $21 per unit and 12,600 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: 8300 $ 120,100 Direct materials Direct labor Manufacturing overhead Cost of goods sold $(08,607) Activity Cost Pool (and Activity Measure) Machining (nachine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost 1500 $ 162,000 $42,800 Total $ 163,100 162,000 $1,254,207 The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC Implementation team concluded that $51,000 and $108,000 of the company's advertising expenses could be directly traced to 5300 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: Manufacturing Overhead $208,377 257,520 101,600 60,800 $ 528,297 90, 100 78 NA Activity 62,000 280 1 NA Total 152,100 2 NA Required: 1. Compute the product margins for the 5300 and T500 under the company's traditional costing system. 2 Compute the product margins for 5300 and T500 under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost essignments.

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter12: Activity-based Management

Section: Chapter Questions

Problem 1CE: Cicleta Manufacturing has four activities: receiving materials, assembly, expediting products, and...