Please help!! Hi-Tek Manufacturing Inc. makes two types of industrial component
ID: 2422269 • Letter: P
Question
Please help!!
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 $1,635,100 1,237,676 Gross margin Selling and administrative expenses 397,424 600,000 Net operating loss $(202,576) Hi-Tek produced and sold 60,400 units of B300 at a price of $19 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 is shown below: B300 T500 Total Direct materials Direct labor Manufacturing overhead $400,800 162,100 $ 562,900 163,700 511,076 $121,000 42,700 Cost of goods sold $ 1,237,676Explanation / Answer
Traditional system Hi. Tek manufacturing Inc Income Statement B300 T500 Total $ Sales 1147600 487500 1635100 Less: Direct material 400800 162100 562900 Direct labour 121000 42700 163700 Manufacturing Overhead 377765 133311 511076 Gross margin 248035 149389 397424 Product margin Gross Margin/Sales*100 22 31 % Manufacturing Overhead (Direct labour $ alklocation) 511076/163700*121000 511076/163700*42700 Hi. Tek manufacturing Inc Income Statement ABC B300 T500 Total Sales 1147600 487500 1635100 Less: Direct material 400800 162100 562900 Direct labour 121000 42700 163700 manufacturing Overhead 202201.0 248175.0 450376.0 Gross margin 423599 34525 458124 Product margin Gross Margin/Sales*100 37 7 % Manufacturing Overhead Amount Activity Amount B300 T500 B300 T500 Machining 199906 90100 62500 118031 81875 Setup 150070 79 270 33970 116100 Product sustaining 100400 1 1 50200 50200 as NA is written in activity Total 202201 248175 Note: we have ignore other 0rganization sustaing cost in amnufacturing overhead and add it to selling & administration expense Otherwise this will be divided according to direct albour 60700 121000 42700 44867 15833 Ans 3Traditional system Hi. Tek manufacturing Inc Income Statement B300 % of total amount T500 % of total amount Total Direct material 400800 44.6 162100.0 47.9 562900 Direct labour 121000 13.5 42700.0 12.6 163700 Manufacturing Overhead 377765 42.0 133310.6 39.4 511076 Total cost assigned to product 899565 338111 1237676 Selling & administrative Expenses 600000 Total Cost 1837676 Ans 4 ABC Hi. Tek manufacturing Inc Income Statement B300 % of total amount T500 % of total amount Total Direct Cost Direct material 400800 51.6 162100.0 29.3 562900 Direct labour 121000 15.6 42700.0 7.7 163700 Manufacturing Overhead 202201 26.1 248175 44.8 450376 Indirect Cost Advertising 52000 6.7 101000.0 18.2 153000 Total cost assigned to product 776001 553975 1329976 Selling & administrative Expenses 447000 Others 60700 Total Cost 1837676