Question

Hopscotch Limited, a manufacturer of a variety of products, uses an

activityminus−based

costing system. Information from its system for the year for all products follows:

Activity cost pool	Total cost	Total activity
Assembly	$583,700	24,000	machineminus−hours
Inspection	$342,000	7,500	inspectionminus−hours
Packaging	$24,500	1,200	order

Hopscotch Limited makes 440 of its product B63 a year, which requires a total of 33 machine hours, 13 inspection hours, and 17 orders. Product B63 requires $52.70 in direct materials per unit and $62.20 in direct labor per unit. Product B63 sells for $255 per unit. What is the profit margin in total for Product B63? (Round all answers to two decimal places.)

A.

$59,901.53

B.

$21,895.50

C.

$110,342.63

D.

$49.76

Answer 1

Activity cost pool	total cost (A)	Cost driver (B)	cost(A)/(B)
Assembly	583700	24000 machine hr	24.32
inspection	342000	7500 inspection hr	45.60
packaging	24500	1200 order	20.42
Cost of 440 unit
title	cost driver	Cost per unit	Total cost	working
Direct material		52.7	23188	440*52.7
Direct labour		62.2	27368	440*62.2
Assembly	33 machine hr	24.32	802.56	24.32*33
Inspection	13 inspection hr	45.6	592.8	45.6*13
Packaging	17 order	20.42	347.14	20.42*17
			52298.5
Profit = 440 unit*255 = 112200, net profit = 112200-52298.5 = 59901.5
Option A is correct