Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts-the B300 and the T500. An absorption...
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Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts-the B300 and the T500. An absorption costing income statement for the most recent period is shown: Sales Hi-Tek Manufacturing Incorporated Cost of goods sold Gross margin Income Statement Selling and administrative expenses Net operating loss $ 1,751,400 1,229,098 522,302 620,000 $ (97,698) Hi-Tek produced and sold 60,000 units of B300 at a price of $21 per unit and 12,600 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: Direct materials $563,100 162,200 B300 $ 400,400 Direct labor $ 120,100 T500 $162,700 $42,100 Total Manufacturing overhead Cost of goods sold 503,798 $1,229,098 1.Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place and and other answers to the nearest whole dollar amounts.) B300 T500 % of % of Total Amount Amount Amount Traditional Cost System Direct laborselected answer correct not not not not not attempted attempted attempted attempted attempted not not not not not Direct materialsselected answer correct Manufacturing overheadselected answer correct Total cost assigned to products Selling and administrativeselected answer correct Total cost attempted attempted attempted attempted attempted not not not not not attempted attempted attempted attempted attempted $0 $0 $0 50 not attempted Costs not assigned to products: Selling and administrativeselected answer correct Otherselected answer correct Total cost $212,948 90,800 62,400 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 $108,000 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: Activity Cost Pool (and Activity Measure) Machining (machine-hours) Manufacturing Activity Overhead B300 T500 Total Direct costs: Direct laborselected answer correct Direct $0 B300 T500 Amount % of Total Amount Amount % of Total Total Amount Amount Activity-Based Costing System not 153,200 Setups (setup hours) 129,150 75 240 315 Product-sustaining (number of products) 101,000 1 1 2 materialsselected answer correct Advertising expenseselected not not not not attempted attempted attempted attempted attempted not not not not attempted attempted attempted attempted attempted not answer correct not not not not not attempted attempted attempted attempted attempted Other (organization-sustaining costs) 60,700 NA NA NA Indirect costs: Total manufacturing overhead cost $503,798 Machiningselected answer correct Setupsselected answer correct Product not not not not not attempted attempted attempted attempted attempted not not not not not sustainingselected answer correct attempted attempted attempted attempted attempted not not not not not attempted attempted attempted attempted attempted Total cost assigned to products $0 90 $0 0 not not not not not attempted attempted attempted attempted attempted not not not not not attempted attempted attempted attempted attempted| Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts-the B300 and the T500. An absorption costing income statement for the most recent period is shown: Sales Hi-Tek Manufacturing Incorporated Cost of goods sold Gross margin Income Statement Selling and administrative expenses Net operating loss $ 1,751,400 1,229,098 522,302 620,000 $ (97,698) Hi-Tek produced and sold 60,000 units of B300 at a price of $21 per unit and 12,600 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: Direct materials $563,100 162,200 B300 $ 400,400 Direct labor $ 120,100 T500 $162,700 $42,100 Total Manufacturing overhead Cost of goods sold 503,798 $1,229,098 1.Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place and and other answers to the nearest whole dollar amounts.) B300 T500 % of % of Total Amount Amount Amount Traditional Cost System Direct laborselected answer correct not not not not not attempted attempted attempted attempted attempted not not not not not Direct materialsselected answer correct Manufacturing overheadselected answer correct Total cost assigned to products Selling and administrativeselected answer correct Total cost attempted attempted attempted attempted attempted not not not not not attempted attempted attempted attempted attempted $0 $0 $0 50 not attempted Costs not assigned to products: Selling and administrativeselected answer correct Otherselected answer correct Total cost $212,948 90,800 62,400 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 $108,000 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: Activity Cost Pool (and Activity Measure) Machining (machine-hours) Manufacturing Activity Overhead B300 T500 Total Direct costs: Direct laborselected answer correct Direct $0 B300 T500 Amount % of Total Amount Amount % of Total Total Amount Amount Activity-Based Costing System not 153,200 Setups (setup hours) 129,150 75 240 315 Product-sustaining (number of products) 101,000 1 1 2 materialsselected answer correct Advertising expenseselected not not not not attempted attempted attempted attempted attempted not not not not attempted attempted attempted attempted attempted not answer correct not not not not not attempted attempted attempted attempted attempted Other (organization-sustaining costs) 60,700 NA NA NA Indirect costs: Total manufacturing overhead cost $503,798 Machiningselected answer correct Setupsselected answer correct Product not not not not not attempted attempted attempted attempted attempted not not not not not sustainingselected answer correct attempted attempted attempted attempted attempted not not not not not attempted attempted attempted attempted attempted Total cost assigned to products $0 90 $0 0 not not not not not attempted attempted attempted attempted attempted not not not not not attempted attempted attempted attempted attempted|
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Related Book For
Managerial Accounting for Managers
ISBN: 978-1259578540
4th edition
Authors: Eric Noreen, Peter Brewer, Ray Garrison
Posted Date:
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