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HI-Tek produced and sold 60,000 units of B300 at a price of $21 per unit and 12.,700 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: B300 $ 400,600 $ 162, 300 $ $ 120,900 $ 42,200 T500 Total Direct materials 562,900 Direct labor 163,100 Manufacturing overhead 491,932 Cost of goods sold $ 1,217,932 The company has created an activity-based costing system to evaluate the profitablity of Its products. HI-Tek's ABC Implementation team concluded that $53,000 and $104,000 of the company's advertising expenses could be directly traced to B300 and T500, respectively. The remalnder of the selling and administrative expenses was organization-sustalning in nature. The ABC team also distributed the company's manufacturing overhead to four activities as shown below: Manufacturing Overhead Activity T5ee Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) other (organization-sustaining costs) B300 Total $ 204, 752 90,100 62, 700 152, 80e 126, 280 78 230 308 100, 600 1 1 2 6e, 300 NA NA NA Total manufacturing overhead cost $ 491,932 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 asslignments.

HI-Tek produced and sold 60,000 units of B300 at a price of $21 per unit and 12.,700 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: B300 $ 400,600 $ 162, 300 $ $ 120,900 $ 42,200 T500 Total Direct materials 562,900 Direct labor 163,100 Manufacturing overhead 491,932 Cost of goods sold $ 1,217,932 The company has created an activity-based costing system to evaluate the profitablity of Its products. HI-Tek's ABC Implementation team concluded that $53,000 and $104,000 of the company's advertising expenses could be directly traced to B300 and T500, respectively. The remalnder of the selling and administrative expenses was organization-sustalning in nature. The ABC team also distributed the company's manufacturing overhead to four activities as shown below: Manufacturing Overhead Activity T5ee Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) other (organization-sustaining costs) B300 Total $ 204, 752 90,100 62, 700 152, 80e 126, 280 78 230 308 100, 600 1 1 2 6e, 300 NA NA NA Total manufacturing overhead cost $ 491,932 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 asslignments.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter5: Process Costing
Section: Chapter Questions
Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...
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HI-Tek produced and sold 60,000 units of B300 at a price of $21 per unit and 12,700 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: взве T500 Total $ 400, 600 $ 162,300 $ $ 120,900 Direct materials 562,900 Direct labor $ 42, 200 163,100 Manufacturing overhead 491,932 Cost of goods sold $ 1,217,932 The company has created an activity-based costing system to evaluate the profitability of its products. HI-Tek's ABC implementation team concluded that $53,000 and $104,000 of the company's advertising expenses could be directly traced to B300 and T500, respectively. The remalnder of the selling and administrative expenses was organization-sustalning in nature. The ABC team also distributed the company's manufacturing overhead to four activities as shown below: Manufacturing Overhead $ 204,752 Activity Total Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) B300 1500 90,100 62,700 152,8ee 126, 280 78 230 308 100, 600 2 Other (organization-sustaining costs) 60, 300 NA NA NA Total manufacturing overhead cost $ 491,932 Requlred: 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the product margins for B300 and T500 under the activity-based costing system. (Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.) B300 T500 Total Product margin
Transcribed Image Text:HI-Tek produced and sold 60,000 units of B300 at a price of $21 per unit and 12,700 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: взве T500 Total $ 400, 600 $ 162,300 $ $ 120,900 Direct materials 562,900 Direct labor $ 42, 200 163,100 Manufacturing overhead 491,932 Cost of goods sold $ 1,217,932 The company has created an activity-based costing system to evaluate the profitability of its products. HI-Tek's ABC implementation team concluded that $53,000 and $104,000 of the company's advertising expenses could be directly traced to B300 and T500, respectively. The remalnder of the selling and administrative expenses was organization-sustalning in nature. The ABC team also distributed the company's manufacturing overhead to four activities as shown below: Manufacturing Overhead $ 204,752 Activity Total Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) B300 1500 90,100 62,700 152,8ee 126, 280 78 230 308 100, 600 2 Other (organization-sustaining costs) 60, 300 NA NA NA Total manufacturing overhead cost $ 491,932 Requlred: 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the product margins for B300 and T500 under the activity-based costing system. (Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.) B300 T500 Total Product margin
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