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.
|Cost of goods sold||1,230,620|
|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 $39 per unit. The company’s traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company’s two product lines is shown below:
|Cost of goods sold||$||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 $104,000 of the company’s advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the company’s manufacturing overhead to four activities as shown below:
|Activity Cost Pool (and Activity Measure)||Overhead||B300||T500||Total|
|Setups (setup hours)||130,380||78||240||318|
|Product-sustaining (number of products)||101,200||1||1||2|
|Other (organization-sustaining costs)||61,000||NA||NA||NA|
|Total manufacturing overhead cost||$||503,720|
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.)
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.)
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