Bachrodt Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below:
Processing $ 21,600
Supervising $ 3,700
Other $ 10,700
Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below
MHs (Processing) Batches (Supervising)
Product Y7 3,700 400
Product V0 6,300 600
Total 10,000 1,000
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
Product Y7 Product V0
Sales (total) $ 102,200 $ 78,900
Direct materials (total) $ 40,800 $ 39,100
Direct labor (total) $ 47,200 $ 22,300
What is the product margin for Product Y7 under activity-based costing?
a. -$3,800
b. $4,728
c. $14,200
d. $6,208
Answers: 3
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