Hi-Tek Manufacturing Inc. makes two types of industrialcomponent parts—the B300 and the T500. An absorption costing incomestatement for the most recent period is shown below:
| Hi-Tek Manufacturing Inc | Income Statement: |
|---|
| SALES | $ 1,693,500 |
| COST OF GOODS SOLD | 1,243,934 |
| GROSS MARGIN | 449,566 |
| SELLING AND ADMINISTRATIVE EXPENSES | 580,000 |
| NET OPERATING LOSS | $ (130,434) |
| |
Hi-Tek produced and sold 60,300 units of B300 at a price of $20per unit and 12,500 units of T500 at a price of $39 per unit. Thecompany’s traditional cost system allocates manufacturing overheadto products using a plantwide overhead rate and direct labordollars as the allocation base. Additional information relating tothe company’s two product lines is shown below:
| B300 | T500 | TOTAL |
|---|
| DIRECT MATERIALS | $ 400,100 | $ 162,100 | $ 562,200 |
| DIRECT LABOR | $ 120,300 | $ 43,000 | 163,300 |
| MANUFACTURING OVERHEAD | | | 518,434 |
| COST OF GOODS SOLD | | | $ 1,243,934 |
The company has created an activity-based costing system toevaluate the profitability of its products. Hi-Tek’s ABCimplementation team concluded that $56,000 and $107,000 of thecompany’s advertising expenses could be directly traced to B300 andT500, respectively. The remainder of the selling and administrativeexpenses was organization-sustaining in nature. The ABC team alsodistributed the company’s manufacturing overhead to four activitiesas shown below:
| ACTIVITY COST POOL (& ACTIVITYMEASURE | MANUFACTURING OVERHEAD | ACTIVITY
B300 | ACTIVITY
T500 | ACTIVITY
TOTAL |
| MACHINE (MACHINE-HRS) | $ 211,554 | 90,500 | 62,800 | 153,300 |
| SETUPS (SETUP HRS) | 146,080 | 72 | 260 | 332 |
| PRODUCT-SUSTAINING ( # OF PRODUCTS) | 100,800 | 1 | 1 | 2 |
| OTHER (ORGANIZATION-SUSTAINING COSTS) | 60,000 | NA | NA | NA |
| TOTAL MANUFACTURING OVERHEAD COST | $ 518,434 | | | |
| | | | |
****** Required *******
1. Compute the product margins for the B300 and T500 under thecompany’s traditional costing system. (Do not round youroverhead rate. Round your other intermediate and final answers tothe nearest whole number.)
| B300 | T500 | TOTAL |
| PRODUCT MARGIN | ?? | ?? | ?? |
2. Compute the product margins for B300 and T500 under theactivity-based costing system. (Negative product marginsshould be indicated by a minus sign. Round your intermediatecalculations to 2 decimal places.)
| B300 | T500 | TOTAL |
| PRODUCT MARGIN | ?? | ?? | ?? |
3. Prepare a quantitative comparison of the traditional andactivity-based cost assignments. (Do not round youroverhead rate. Round your other intermediate calculations and finalanswers to the nearest whole number. Round your "Percentage" answerto 1 decimal place. (i.e. .1234 should be entered as12.3))
| B300 | B300 | | T500 | T500 | | |
| | % OF | | | % OF | | TOTAL |
| AMOUNT | TOTAL AMOUNT | | AMOUNT | TOTAL AMOUNT | | |
| TRADITIONAL COST SYSTEM | | | | | | | AMOUNT |
| ?? | ?? | ?? | % | ?? | ?? | % | ?? |
| ?? | ?? | ?? | % | ?? | ?? | % | ?? |
| ?? | ?? | ?? | % | ?? | ?? | % | ?? |
| TOTAL COST ASSIGNED TO PRODUCTS | ?? | | | ?? | | | ?? |
| ?? | | | | | | | ?? |
| TOTAL COST | | | | | | | ?? |
| B300 | B300 | | T500 | T500 | | TOTAL |
| | % OF | | | % OF | | |
| AMOUNT | TOTAL AMOUNT | | AMOUNT | TOTAL AMOUNT | | AMOUNT |
| ACTIVITY-BASED COSTING SYSTEM | | | | | | | |
| DIRECT COST: | | | | | | | |
| ?? | ?? | ?? | % | ?? | ?? | % | ?? |
| ?? | ?? | ?? | % | ?? | ?? | % | ?? |
| ?? | ?? | ?? | % | ?? | ?? | % | ?? |
| INDIRECT COSTS: | | | | | | | |
| ?? | ?? | ?? | % | ?? | ?? | % | ?? |
| ?? | ?? | ?? | % | ?? | ?? | % | ?? |
| ?? | ?? | ?? | % | ?? | ?? | % | ?? |
| TOTAL COST ASSIGNED TO PRODUCTS | ?? | | | ?? | | | ?? |
| COSTS NOT ASSIGNED TO PRODUCTS: | | | | | | | |
| ?? | | | | | | | ?? |
| ?? | | | | | | | ?? |
| TOTAL COST | | | | | | | ?? |
( All the "?" spaces are the ones I NEED answered)
