Inc., makes two types of industrial component parts the B300 and the TS00. An ab
ID: 2528637 • Letter: I
Question
Inc., makes two types of industrial component parts the B300 and the TS00. An absorption costing income statement for the most recent period is shown: Hi-Tek Manufacturing Inc. Income Statenent Sales cost of goods sold Gross margin Selling and administrative expenses Net operating loss 2,100, 00 , 600,00 500, 000 550,000 s (50, 000) Hi-Tek produced and sold 70,000 units of B300 at a price of $20 per unit and 17,500 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: B300 500 Total S436, 300 $251,700S 688, 000 Direct materials Direct labor 200,000 $104,000304,000 Manufacturing overhead 608,000 Cost of goods sold 1, 600, 000Explanation / Answer
Requirement 1 Product margin under traditional costing B300 T500 Sales 1400000 700000 Cost of goods sold Materials 436300 251700 labor 200000 104000 Overhead 400000 208000 Total cost of goods sold 1036300 563700 Product margin 363700 136300 Requirement 2 Product margin under activity based costing B300 T500 Sales 1400000 700000 Cost of goods sold Materials 436300 251700 labor 200000 104000 Indirect costs Amount Cost driver quanity machining 213500 152500 126000 87500 Set ups 157500 375 31500 126000 Product -sustaining 120000 2 60000 60000 Total cost of goods sold 853800 629200 Product margin 546200 70800 Requirement 3 Your answer is correct with photo you have posted