Question

Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment depreciation and supervisory expense--to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below:

Overhead costs:

Equipment depreciation	$	107,000
Supervisory expense	$	9,900

Distribution of Resource Consumption Across Activity Cost Pools:

	Activity Cost Pools
	Machining	Order Filling		Other
Equipment depreciation	0.60	0.30		0.10
Supervisory expense	0.60	0.20		0.20

In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products.

Activity:

	MHs (Machining)	Orders (Order Filling)
Product W1	5,630	118
Product M0	17,400	900
Total	23,030	1,018

Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

Sales and Direct Cost Data:

	Product W1		Product M0
Sales (total)	$	79,600	$	63,600
Direct materials (total)	$	33,700	$	14,400
Direct labor (total)	$	23,600	$	31,400

What is the product margin for Product W1 under activity-based costing? (Round your intermediate calculations to 2 decimal places.)

Answer 1

Product Margin for Product W1: $1203.

*****************

Hi buddy, If you have any queries/doubts,Immediately drop your messages in the comment box !!!! I will help you.
Thanks, All the best!!!!!!