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In: Accounting

HiTech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses...

HiTech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below

Activity Cost

Material Handling $225,000

Material Insertion $2,475,000

Automated machinery $840,000

Finishing $170,000

Packaging $170,000

The following information pertains to the three product lines for next year:

Economy Standard Deluxe  

Unit 2 be prod. 10,000 5,000 2,000

Order 2 ship 1,000 500 200

# parts per unit 10 15 25

Machine hr. per unit 1 3 5

Labor hrs. per unit 2 2 2

a)

What is HiTech's pool rate for the material-handling activity?

Round your amounts to the nearest cent. Do not enter dollar signs or commas.

Answer:

b) What is HiTech's pool rate for the automated machinery activity?

Round your amounts to the nearest cent. Do not enter dollar signs or commas.

Answer:

c) What is HiTech's pool rate for finishing activity?

Round your amounts to the nearest cent. Do not enter dollar signs or commas.

Answer:

d) What is HiTech's pool rate for the packaging activity?

Round your amounts to the nearest cent. Do not enter dollar signs or commas.

Answer:

e) Under an activity-based costing system, what is the total amount of overhead allocated to the Economy product line?

Round your amounts to the nearest whole dollar. Do not enter dollar signs or commas.

Answer:

f) Under an activity-based costing system, what is the total amount of overhead allocated to the Standard product line?

Round your amounts to the nearest whole dollar. Do not enter dollar signs or commas.

Answer:

Under an activity-based costing system, what is the total amount of overhead allocated to the Deluxe product line?

Round your amounts to the nearest whole dollar. Do not enter dollar signs or commas.

Answer:

Assume that HiTech instead decides to use a traditional volume-based costing system where total overhead costs ($3,880,000) are applied to all products on the basis of direct labor hours. Discuss the advantages or disadvantages of this choice (be specific, citing inferences from your ABC analyses above

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Expert Solution

ekkarill92 answered 1 year ago
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