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 |

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Expected Activity
Assembly
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Estimated
Overhead
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Expected Activity
Assembly
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