Question

Radakovich Corporation has provided the following data from its activity-based costing system:

Activity Cost Pools	Total Cost			Total Activity
Assembly	$	1,341,408		62,800	machine-hours
Processing orders	$	67,522		2,450	orders
Inspection	$	123,120		1,620	inspection-hours

The company makes 440 units of product F60N a year, requiring a total of 1,830 machine-hours, 106 orders, and 37 inspection-hours per year. The product's direct materials cost is $52.67 per unit and its direct labor cost is $12.32 per unit. The product sells for $181.00 per unit.

According to the activity-based costing system, the product margin for product F60N is: (Round your intermediate calculations to 2 decimal places.)

$9,034.24

$9,143.60

$6,222.24

$51,044.40

Answer 1

Calculation of product margin for product F60N
Particulars			total cost (1)	Total activity (2)	Cost per activity (1)/(2) =(3)	no of product F60N(4)	total cost (3)*(4)
Assembly			1341408	62800	21.36	1830	39088.8
processing			67522	2450	27.56	106	2921.36
inspection			123120	1620	76	37	2812
							44822.160
Overhead per unit = total cost/unit of product
overhead per unit = 44822.160/440unit = 101.8685
Product cost per unit
Direct material cost			52.67
Direct labour cost			12.32
Overhead cost			101.8685
total product cost p.u			166.8585
Product cost = 440 unit * 166.8585= 73417.74
Sale price = 440 unit * 181 = 79640
Product margin = Sale price - product cost
product Margin = 79640-73417.74= 6222.26 , i.e approx 6222.24
Option 6222.24 Option is correct as per the above calculation