Question

# Rosenbrook Corporation has provided the following data from its activity-based costing system:                 Activity Cost Pool...

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

 Activity Cost Pool Total Cost Total Activity                RM Assembly................................ RM710,770 37,000 machine-hours   9797.1 Processing orders.................. RM39,690 1,800 Orders                1764 Inspection............................... RM119,116 1,940 inspection-hours 614
 Activity Cost Pool Total Cost Total Activity                RM Assembly................................ RM710,770 37,000 machine-hours   9797.1 Processing orders.................. RM39,690 1,800 Orders                1764 Inspection............................... RM119,116 1,940 inspection-hours 614

Data concerning one of the company’s products, Product H73N, appear below:

 Selling price per unit................................................ RM320.00 Direct materials cost per unit.................................. RM34.94 Direct labor cost per unit......................................... RM49.21 Annual unit production and sales.......................... 460 Annual machine-hours............................................. 510 Annual orders............................................................ 80 Annual inspections................................................... 10

According to the activity-based costing system, the product contribution margin for product H73N is:

A.

RM7,275.90

B.

RM8,142.00

C.

RM108,491.00

D.

RM100,349

 Activity rate = Estimated Overheads/Estimated Driver Cost Pool Total cost Total Activity Activity Rate Assembly 710,770.00 37,000.00 19.21 Processing Orders 39,690.00 1,800.00 22.05 Inspection 119,116.00 1,940.00 61.4 Calculation of product contribution margin Total Sales 147,200.00 Direct material 16,072.40 Direct labor 22,636.60 Product Contribution Margin 108,491.00 Hence, the answer is c. RM 108,491 Note: Fixed overhead costs are not considered in calculation of contribution margin