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:

Hi-Tek produced and sold 60,000 units of B300 at a price of $20 per unit and 12,800 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:

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek’s ABC implementation team concluded that $52,000 and $109,000 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 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. Prepare a quantitative comparison of the traditional and activity-based cost assignments.

Compute the product margins for the B300 and T500 under the company’s traditional costing system. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)

Compute the product margins for B300 and T500 under the activity-based costing system. (Negative product margins should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places.)

Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place and and other answers to the nearest whole dollar amounts.)

1. True or false?(1 point each)
   1. When marginal product is less than average product, average product is decreasing.
   2. In the long run, fixed costs are small.
   3. Marginal cost is the increase in total cost that results from a one-unit increase in a variable input.
   4. The vertical distance between the average variable cost curve and the average total cost curve equals average fixed cost.
   5. Average fixed costs are constant.
   6. Perfectly competitive firms are price takers.
   7. In the long run, perfectly competitive firms make zero economic profit, that is, their owners make a normal profit.
   8. In the short-run, a firm shuts down when the price is less than the average total cost.
   1. If a firm is maximizing profits, the extra revenue it receives from selling its last unit of output exceeds the extra cost of producing that unit.

At the beginning of May, Williams Industries has 200 units of a product with a unit cost of $500. Its inventory records report the following transactions for the month of May:

Williams sells 500 units in May.

a) Compute the Cost of Goods Sold (COGS) for May for this product, assuming Hanna uses FIFO, LIFO, and Average Cost inventory methods.

b) Compute the Ending Inventory Balance (EI) for May for this product, assuming Hanna uses FIFO, LIFO, and Average Cost inventory methods.

c) Assume the total revenue is $350,000, what are the Gross Profit Margin under FIFO, LIFO, and Average Cost methods?

TASK-1 Using EOQ technique calculate the required items

Tim John is the purchasing manager at the headquarters of a multinational fast food chain with a central inventory operation. Tim's fastest-moving inventory item has a demand of 30 units per day. The cost of each unit is $150, and the inventory carrying cost is $5 per unit per year. The average ordering cost is $70 per order. (It is a corporate operation, and there are 300 working days per year)

1. What is the EOQ?
2. What is the average inventory if the EOQ is used?
3. What is the optimal number of orders per year?
4. What is the optimal number of days in between any two orders?
5. What is the annual cost of ordering and holding inventory?
6. What is total inventory management cost?
7. What is total materials cost
8. What is the total annual inventory cost to be recorded in accounts?

Flexible Overhead Budget Carson Wood Products Company prepared the following factory overhead cost budget for the Press Department for April of the current year, during which it expected to require 9,000 hours of productive capacity in the department: Variable overhead cost: Indirect factory labor $70,200 Power and light 2,610 Indirect materials 25,200 Total variable overhead cost $98,010 Fixed overhead cost: Supervisory salaries $34,300 Depreciation of plant and equipment 21,560 Insurance and property taxes 13,720 Total fixed overhead cost 69,580 Total factory overhead cost $167,590 Assuming that the estimated costs for May are the same as for April, prepare a flexible factory overhead cost budget for the Press Department for May for 7,000, 9,000, and 11,000 hours of production. Round your interim computations to the nearest cent, if required. Enter all amounts as positive numbers.

Every year Bridgeport Industries manufactures 6,200 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows:

Flintrock, Inc., has offered to sell 6,200 units of part 231 to Bridgeport for $34 per unit. If Bridgeport accepts Flintrock’s offer, its freed-up facilities could be used to earn $12,800 in contribution margin by manufacturing part 240. In addition, Bridgeport would eliminate 40% of the fixed overhead applied to part 231.

(a) Calculate total relevant cost to make and net cost to buy.

(b) Should Bridgeport accept Flintrock’s offer?

Select an option                                                          Yes No

The firm WidgetsRUs uses a factory which costs $150/day, and Labor which costs $50/day.

It competes in a perfectly competitive market, and the market price, P* = $5.

Fill in the table below:

What is the most efficient scale of the firm? In other words, what is the most efficient quantity a firm this size can produce?

Graph the firm’s marginal cost curve, average variable cost curve and average total cost curve. Show the most efficient scale of the firm on the graph, denoting the efficient level of output Q^e.

2. Which of the following costs are always increasing as output increases? (a) Variable Cost only (b) Fixed Cost only (c) Marginal Cost only (d) Total Cost only (e) Total Cost and Variable Cost

3.A firm has a Cobb-Douglas production function ? = 50√ ??. This function exhibits a constant return to scale. The total cost function for this production process is ? ? = ? · √ ?·? 50 , where ? is output level, ? and ? are prices of labor and capital. The marginal cost of production for this function is: (a) Constant. (b) Increasing. (c) Decreasing. (d) None of the above.

4. If some production function ?(?, ?) exhibits an increasing return to scale, then the marginal cost of production decreases as output level increases. (a) True. (b) False. (c) Not enough information given. (d) None of the above.

5. It will never cost more to produce a certain amount of output in the long run than in the short run. (a) True. (b) False. (c) Not enough information given. (d) None of the above.