I am resubmitting this question as the answer to number two is incorrect from the guidance I was given throught Bartleby. 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 StatementSales$1,643,000 Cost of goods sold 1,230,620 Gross margin 412,380 Selling and administrative expenses 620,000 Net operating loss$(207,620)   Hi-Tek  produced and sold 60,200 units of B300 at a price of $19 per unit and 12,800 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:  B300T500TotalDirect materials$400,600  $162,700  $563,300 Direct labor$120,700  $42,900   163,600 Manufacturing overhead         503,720 Cost of goods sold        $1,230,620   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 $104,000 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 also distributed the company’s manufacturing overhead to four activities as shown below:  ManufacturingActivityActivity Cost Pool (and Activity Measure)Overhead  B300  T500  Total Machining (machine-hours)$211,140   90,300  62,700  153,000 Setups (setup hours) 130,380   78  240  318 Product-sustaining (number of products) 101,200   1  1  2 Other (organization-sustaining costs) 61,000   NA  NA  NA Total manufacturing overhead cost$503,720            Required1. Compute the product margins for the B300 and T500 under the company’s traditional costing system. (Do not round your overhead rate. Round your other intermediate and final answers to the nearest whole number.)    B300T500TotalProduct margin$250,598$161,512$412,110 2. 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.)   B300T500TotalProduct margin$$$

Question
Asked Jul 15, 2019

I am resubmitting this question as the answer to number two is incorrect from the guidance I was given throught Bartleby.

 

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 $ 1,643,000  
Cost of goods sold   1,230,620  
Gross margin   412,380  
Selling and administrative expenses   620,000  
Net operating loss $ (207,620)  

 

 

Hi-Tek  produced and sold 60,200 units of B300 at a price of $19 per unit and 12,800 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:
 

  B300 T500 Total
Direct materials $ 400,600     $ 162,700     $ 563,300  
Direct labor $ 120,700     $ 42,900       163,600  
Manufacturing overhead                   503,720  
Cost of goods sold                 $ 1,230,620  

 

 

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 $104,000 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 also distributed the company’s manufacturing overhead to four activities as shown below:
 

  Manufacturing Activity
Activity Cost Pool (and Activity Measure) Overhead     B300     T500     Total  
Machining (machine-hours) $ 211,140       90,300     62,700     153,000  
Setups (setup hours)   130,380       78     240     318  
Product-sustaining (number of products)   101,200       1     1     2  
Other (organization-sustaining costs)   61,000       NA     NA     NA  
Total manufacturing overhead cost $ 503,720                      

 


Required

1. Compute the product margins for the B300 and T500 under the company’s traditional costing system. (Do not round your overhead rate. Round your other intermediate and final answers to the nearest whole number.)

 

 
 
  B300 T500 Total
Product margin $250,598 $161,512 $412,110


 

2. 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 $ $ $

 

check_circleExpert Solution
Step 1

Calculate the sales value for each component.

Number of Sales price
per unit
(B)
Sales value
(amount in S
(AxB
units sold
Components
(A)
$1,143,800.00
B300
60,200
$19.00
T500
12,800
$39.00
$499,200.00
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Number of Sales price per unit (B) Sales value (amount in S (AxB units sold Components (A) $1,143,800.00 B300 60,200 $19.00 T500 12,800 $39.00 $499,200.00

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Step 2

Calculate the manufacturing overhead for each component.

Total manufacturing overhead
Manufacturing
Total direct labor cost
overhead for B300j
Direct labor cost of B300
S503,720$120,700
s163, 600
=S371,632.05
Total manufacturing overhead
Manufacturing
Total direct labor cost
overhead for T500j
Direct labor cost of T500
S503.720 $42,900
$163,600
S132,087.95
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Total manufacturing overhead Manufacturing Total direct labor cost overhead for B300j Direct labor cost of B300 S503,720$120,700 s163, 600 =S371,632.05 Total manufacturing overhead Manufacturing Total direct labor cost overhead for T500j Direct labor cost of T500 S503.720 $42,900 $163,600 S132,087.95

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Step 3

1. Calculate the product margin for each component un...

Particulars
B300
T500
Total
$1,143,800.00 | $ 499,200.00
$400,600.00 $ 162,700.00
120,700.00
$ 371.632.05 $ 132,087.95
$250,867.95 s 161,512.05
$ 1,643,000.00
$563,300.00
$ 163,600.00
$ 503,720.00
S 412,380.00
Sales
Less: Direct materials
$ 42,900.00
Direct labor
Manufacturing overhead
Product margin
help_outline

Image Transcriptionclose

Particulars B300 T500 Total $1,143,800.00 | $ 499,200.00 $400,600.00 $ 162,700.00 120,700.00 $ 371.632.05 $ 132,087.95 $250,867.95 s 161,512.05 $ 1,643,000.00 $563,300.00 $ 163,600.00 $ 503,720.00 S 412,380.00 Sales Less: Direct materials $ 42,900.00 Direct labor Manufacturing overhead Product margin

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