[Get Solution] Traditional and Activity-Based Product Margins Assignment
Comparing Traditional and Activity-Based Product Margins [LO7-1, LO7-3, LO7-4, LO7-5] 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: 50 points Skipped ні-те Inc ne Stat cent Sales $1,755,900 1,221,475 Cost of goods sold Gross margin Selling and administrative expenses eBook Net operating loss (65,575) Print Hi-Tek produced and sold 60,400 units of B300 at a price of $21 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 are shown below: References T500 B300 40 0 Total Direct materials Direct labor Manufacturing overhead 00 .600 163,100 495,775 $120,700 s 42,400 $1,221,475 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 $107,000 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 Overhead $ 207,225 126,450 101,400 60,700 Activity T500 в300 Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-sustaining (number of products) Other organization-sustaining costs) Total 90,700 62,800 210 153,500 281 71 1 1 NA NA NA $ 495,775 Total manufacturing overhead cost 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 assignments.
Complete this question by entering your answers in the tabs below. Required 2 Required 1 Required 3 Compute the product margins for the B300 and T500 under the company's traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) B300 T500 Total Product margin.
Compute the product margins for the b300 and t500 under the company’s traditional costing system.
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