Hi-Tek Manufacturing Inc. makes two types of industrial component parts-the B300
ID: 2417188 • Letter: H
Question
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 below: Hi-Tek Manufacturing Inc Income Statement Sales Cost of goods sold $1,640,900 1,224,200 Gross margin Selling and administrative expenses 416,700 560,000 Net operating loss $ (143,300) Hi-Tek produced and sold 60,500 units of B300 at a price of $19 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: T500 B300 $ 400,600 $120,700 Total Direct materials Direct labor Manufacturing overhead 162,800 $ 563,400 162,800 498,000 42,100 Cost of goods sold $ 1,224,200Explanation / Answer
1.
Product margin under traditional system is
2.
Product Margin under ABC system is
3.
Comparison of traditional and activity-based cost assignment is as follows:
Product margin under traditional system is