sorry discard the one says Smokey. I need Hi teck Tek produced and sold 60.300 u

Question

sorry discard the one says Smokey. I need Hi teck

Tek produced and sold 60.300 units or8000 at -of$20 per unt and 12,600 it of T500 at a price of $0 per unit The compony's vaditional oot and 1 The company has created an activity-tased costing system to evaluate the profitabilitly of its products -Tek's ABC minwconlues that 55000 O Answer is complete but not entirely correct. 2 Compute the product margins for 8300 and T500 under the a actvity based costing systes (Negative product margins shouid be indicated by a m O Answer is complete but not entirely correct 358,525 0 (,240) O5 330.285

Explanation / Answer

1. Compute the product margins for the B300 and T500 under the company's traditional costing system. PMOH Rate = Estimated total mfg. cost / Estimated total DL $ PMOH Rate = $506,112 / $162,800 $3 per DL$ B300 T500 Total Sales $1,206,000 $504,000 $1,710,000 Direct materials $420,100 $163,000 $583,100 Direct labor 120,300 42,500 162,800 Manufacturing overhead applied 373,988 132,124 506,112 Total manufacturing costs $914,388 $337,624 $1,252,012 Product margin (Traditional Gross Margin) $291,612 $166,376 $457,988 Note: All of the mfg. overhead costs is applied to either B300 or T500. 2. Compute the product margins for the B300 and T500 under the activity-based costing system. B300 T500 Total Sales $1,206,000 $504,000 $1,710,000 Direct materials $420,100 $163,000 $583,100 Direct labor 120,300 42,500 162,800 Advertising expense 51,000 105,000 156,000 MOH assigned (2nd Stage Allocations)      Machining pool 119,856 82,896 202,752      Setup pool 30,960 111,800 142,760      Product sustaining 50,100 50,100 100,200 Total costs assigned $792,316 $555,296 $1,347,612 Product margin (ABC) $413,684 ($51,296) $362,388 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. Traditional Costing B300 T500 Total Sales $1,206,000 $504,000 $1,710,000 Direct materials $420,100 $163,000 $583,100 Direct labor 120,300 42,500 162,800 Manufacturing overhead applied 373,988 132,124 506,112 Total manufacturing costs $914,388 $337,624 $1,252,012 Product margin (Traditional) $291,612 $166,376 $457,988 Selling & administrative 600,000      Net operating costs ($142,012) Note: Total costs accounted for $1,852,012 ABC Costing B300 T500 Total Sales $1,206,000 $504,000 $1,710,000 Direct materials $420,100 $163,000 $583,100 Direct labor 120,300 42,500 $162,800 Advertising expense (traced) 51,000 105,000 156,000 Mfg. Overhead assigned      Machining pool 119,856 82,896 202,752      Setup pool 30,960 111,800 142,760      Product sustaining 50,100 50,100 100,200 Total costs assigned $792,316 $555,296 $1,347,612 Product margin (ABC) $413,684 ($51,296) $362,388 $95,600 Selling & Administrative (Indirect) 444,000 Organizational Sustaining Costs 60,400 95,600 Net operating income ($142,012) Note: Total costs accounted for $1,852,012 Difference in Product Margins $122,072 ($217,672) ($95,600) ($95,600) The traditional costing system uses one unit-level allocation base, direct labor dollars,   to assign manufacturing overhead costs. B300 T500 Total      Direct labor dollars $120,300 $42,500 $162,800      Consumption ratio: 0.739 0.261 100% The ABC costing system uses three different pool drivers and different consumption ratios. 1. Machining pool: Cost driver = Number of machine hours (unit-level driver) B300 T500 Total      Machine hours 90,800 62,800 153,600      Consumption ratio: 0.591 0.409 100% 2. Setups pool: Cost driver = Number of setup hours (batch-level driver) B300 T500 Total      Setup hours 72 260 332      Consumption ratio: 0.21686747 0.78313253 100% 3. Product Sustaining pool: Cost driver = Number of products (product-level driver) B300 T500 Total      # of Products 1 1 2      Consumption ratio: 0.5 0.5 100%

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