60.1K

Verified Solution

Link Copied!

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 Hi-Tek Manufacturing Inc Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating loss 1,689,500 1,253,155 436,345 560,000 $ (123,655) Hi-Tek produced and sold 60,100 units of B300 at a price of $20 per unit and 12,500 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 400,200 $162,300 562,500 163,300 527,355 1,253,155 Direct labor Manufacturing overhead 120,600 42,700 Cost of goods sold The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek's ABC implementation team concluded that $55,000 and $102,000 of the company's advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the seling 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 Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost Manufacturing Overhead $211,975 154,880 100,000 B300 T500 Total 90,300 62,200 152,500 72 280 352 60,500 NA NA NA 527,355

Answer & Explanation Solved by verified expert

See Answer