Bachrodt Corporation uses activity-based costing to compute product margins. Ove

Question

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 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

Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.

What is the product margin for Product Y7 under activity-based costing?

Multiple Choice

-$3,800

$4,728

$14,200

$6,208

Processing $ 21,600 Supervising $ 3,700 Other $ 10,700

Explanation / Answer

B.$4,728.

processing cost to be allocated to product Y7 = total processing cost / total processing hours * Product Y7 processing hour

=>$21,600 / 10,000 * 3,700

=>$7,992.

supervising cost to be allocated to product Y7 = total supervising cost /total batches * Prduct Y7 batches

=>$3,700 /1000 * 400

=>$1,480.

now.

the following is the calculation of product margin:

sales 102,200 less: direct material (40,800) direct labour (47,200) processing (7992) supervising (1480) margin $4,728

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