Hi-Tek manufacturing Inc. Provides two types of commercial component parts-the B300 and the T500. An absorb costing earnings statement for the many recent period is displayed below:Hi-Tek production Inc.Income StatementSales............................................ $2,100,000Cost of items sold............................. 1,600,000Gross margin....................................... 500,000Selling and administrative costs ........... 550,000Net operating loss................................ $ (50,000)Hi-Tek produced and also sold 70,000 systems of B300 at a price that $20 per unit and 17,500 units of T500 at a price of $40 every unit. The company"s traditional cost mechanism allocates production overhead to commodities using a plant large overhead rate and also direct labor dollars together the allocation base. Additional information relating to the company"s 2 product lines is presented below:
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The agency has created an activity-based costing system to evaluate the benefit of its products. Hi-Tek"s abc implementation team concluded that $50,000 and also $100,000 the the company"s advertising expenses could be directly traced to B300 and also T500, respectively. The remainder the the selling and also administrative costs was organization-sustaining in nature.The abc team likewise distributed the company"s production overhead to four activities as presented below:


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Required:1. Utilizing Exhibit 6-13 as a guide, compute the product margins for the B300 and also T500 under the company"s classic costing system.Exhibit 6-13 Product Margins-Traditional Costing System


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2. Using Exhibit 6-11 as a guide, compute the product margins for B300 and also T500 under the activity-based costing system.Exhibit 6-11: Product Margins-Activity-Based Costing


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3. Using Exhibit 6-14 as a guide, prepare a quantitative to compare of the traditional and task based cost assignments. Explain why the traditional and also activity-based cost assignments differ?Exhibit 6-14: A to compare of Traditional and also Activity-Based cost Assignments


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Precision Manufacturing
Inc.

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Hi-Tek Manufacturing inc makes two types of industrial component parts-the 5300 and the T500. An...... ... Compute the product margins for the B300 and T500 under the company"s traditional costing system. 2) Compute the product margins for B300 and T500 under the activity-based costing system. 3)... View Answer
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B300 T500 complete Manufacturing overhead expense of items sold $200,000 $104,000 304,000 608,000 $1,600,000o activity Manufacturing Overhead task Cost pool (and activity Measure) B300 T500 full $213,500 90,000 62,500 152,500 375 2 NA 157,500 120,000 117,000 $608,000 75 300 Product-sustalning (number that products) other (organization-sustalning costs). Total manufacturing overhead cost NA NA F G H 1 Product Margins-Traditional price System tradition Compass Housings 2 3 Sales 4 cost of items sold: 5 straight materials 6 straight labor 7 production overhead 8 Product margin 9 Selling and administrative 10 net operating earnings Standard Stanchions complete 2,660,000 540,000 3,200,000 69,500 87.500 S 905,500 s 975.000 351.250 263,750 875 0002044 250 873,750 :D: E 1 Product Margins-Activity-Based Costing traditional Stanchions tradition Compass Housings 540,000 2,660,000 3 Sales 4 expenses 5 straight materials 6 straight labor 7 Shipping 8 client orders (from exhibit 6-9) 9 Product design (from exhibition 6-9) 10 Order size (from exhibit 6-9) 11 full cost 2 Product margin 13 905,500 263,750 60,000 192,000 $ 69,500 87,500 5,000 128,000 252,000 1753 750 589.500 HMEExhibit 6-7 exhibit 6-9Exhibit 6-10Exhibit 6-11 exhibition 6-0 DEF traditional Stanchions practice Compass Housings 2 timeless Cost device 3 direct matenals 4 straight labor 5 production overhead quantity %" Amount% Tota s 905,500 92.9% S 69.500 7.1% $975,000 263,750 75.1% 87,500 24.9% 351,250 875000 87.5% -125.000 12.5% 1.000.000 2,326,250 total cost assigned to commodities T Selling and also administrative 8 full cost $2.044 250 0 Activity-Based Costing mechanism 11 Direct expenses 12 Drect products 13 straight labor 14 Shipping 15 Indirect costs: 16 customer orders $ 905,500 263,750 60,000 92.9% 75.1% 92.3% S 69.500 87,500 5,000 24. 9% 7.7% 7.1% $975,000 351,250 65,000 192,000 60.0% 128,000 40.0% 0.0% 252,000 100.0% 12.6% 320,000 262,000 380000 2,343,250 17 Product style 18 stimulate sizo -332.500875% $1753 750 -47 500 19 complete cost assigned to products 21 prices not assigned come products: 22 Customer connections 23 various other 367.500 24 total cost 25 26 The percentages space rounded to the nearest tenth the a percent. 27 HFhit 6-1 it6-13Fxhiit 6-14 Fxhhit 6A-1Fhhit4