80.2K

Verified Solution

Link Copied!

PLEASE FILL IN BOTH CHARTS AND ANSWER WHAT THE PRODUCT MARGIN IS FOR BOTH TRADITIONAL AND ACTIVITY BASED COSTING PLEASE!!! Thank you so much!!!!!

HI-Tek Manufacturing, Incorporated, makes two industrial component parts - B300 and T500. An absorption costing income statement for the most recent period is shown below: Hi-Tek produced and sold 60,400 units of B300 at a price of $20 per unit and 12,800 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. The company created an activity-based costing system to evaluate the profitability of its products. Hil-Tek's ABC implementation team concluded that $56,000 and $102,000 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: Required: 1. Compute the product margins for B300 and T500 under the company's traditional costing system. 2. Compute the product margins for 8300 and T500 under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments. HI-Tek Manufacturing, Incorporated, makes two industrial component parts - B300 and T500. An absorption costing income statement for the most recent period is shown below: Hi-Tek produced and sold 60,400 units of B300 at a price of $20 per unit and 12,800 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. The company created an activity-based costing system to evaluate the profitability of its products. Hil-Tek's ABC implementation team concluded that $56,000 and $102,000 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: Required: 1. Compute the product margins for B300 and T500 under the company's traditional costing system. 2. Compute the product margins for 8300 and T500 under the activity-based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments

Answer & Explanation Solved by verified expert

See Answer