hi-tek manufacturing, inc., makes two types of industrial components SDLU1P2018

Question

hi-tek manufacturing, inc., makes two types of industrial components SDLU1P2018 A g for Ma my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion Return to que Hi-Tek Manufacturing, Inc., makes two types of industrial component parts-the 8300 and the T500. An absorption costing income statement for the most recent period is shown: Manufacturing Inc. Sales Cost of goods sold s 1,764,000 1,217,287 546,713 550,00 Selling and administrative expenses Net operating loss $(3,287) Hi-Tek produced and sold 60,000 units of 8300 at a price of $21 per unit and 12,600 units of T500 at a price of $40 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 T500 $ 400,900 $162,400$ 563,300 B300 s121,000 $ 42,800 163,800 Direct labor Manufacturing overhead 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 $57,000 and $101,000 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

Explanation / Answer

Req 1) Product margin as per Traditional allocation of overhead: B300 T500 Total Sales 1260000 504000 1764000 Less:Manuf Expenses: DM 400900 162400 563300 DL 121000 42800 163800 Manuf OH 362104 128083 490187 Total COGS 884004 333283 1217287 G Margin 375996 170717 546713 Less:Selling & Adm exp: Advertising 57000 101000 158000 Net Margin 318996 69717 388713 Req 2) Product margin as per ABC allocation of overhead: B300 T500 Total Sales 1260000 504000 1764000 Less:Manuf Expenses: DM 400900 162400 563300 DL 121000 42800 163800 Manuf OH: Machining 118293 81744 200037 Setups 34650 94500 129150 Product-sustaining 50200 50200 100400 Other 0 0 0 Total M OH : 203143 226444 429587 Total COGS 725043 431644 1156687 G Margin 534957 72356 607313 Less:Selling & Adm exp: Advertising 57000 101000 158000 Net Margin 477957 -28644 449313 Req 3: Comparison of traditional and ABC assignments: B300 T500 Unallocated Total as per Traditional method 362104 128083 0 490187 as per ABC method 203143 226444 60600 490187

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