Question
In: Accounting
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below:
| Processing | $ | 5,945 |
| Supervising | $ | 19,680 |
| Other | $ | 11,300 |
Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:
| MHs (Processing) |
Batches (Supervising) |
|
| Product M0 | 13,700 | 400 |
| Product M5 | 800 | 400 |
| Total | 14,500 | 800 |
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
| Product M0 | Product M5 | |||
| Sales (total) | $ | 81,800 | $ | 94,400 |
| Direct materials (total) | $ | 29,400 | $ | 32,300 |
| Direct labor (total) | $ | 28,700 | $ | 42,600 |
What is the product margin for Product M5 under activity-based costing?
Multiple Choice
$23,700
$19,500
$9,332
$8,243
Solutions
Expert Solution
Correct Answer--- $9,332
Calculations
|
Cost Drivers Rate |
|||||
|
Activity |
Cost Drivers |
Total Activity Amount (A) |
Level of Activity (B) |
Activity Rate (C=A/B) |
|
|
Processing |
Machine Hours |
$ 5,945.00 |
14500.00 |
$ 0.41 |
Per Machine Hour |
|
Supervising |
Number of Batches |
$ 19,680.00 |
800.00 |
$ 24.60 |
Per batch |
|
$ 25,625.00 |
|||||
|
Product M5 |
Activity rate(A) |
Activity Driver Incurred (B) |
Overhead Assigned (C=A*B) |
|
Processing |
$ 0.41 |
800 |
$ 328.00 |
|
Supervising |
$ 24.60 |
400 |
$ 9,840.00 |
|
Total Overheads |
$ 10,168.00 |
||
Calculation of Product margin
|
Product M5 |
|
|
Sales |
$ 94,400.00 |
|
Direct material cost |
$ 32,300.00 |
|
Direct Labor |
$ 42,600.00 |
|
Overheads Allocation |
$ 10,168.00 |
|
Total product margin |
$ 9,332.00 |
ekkarill92 answered 2 years agoRelated Solutions
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below:
Processing
$
5,945
Supervising
$
19,680
Other
$
11,300
Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to...
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...
Mirabile Corporation uses activity-based costing to compute
product margins. Overhead costs have already been allocated to the
company's three activity cost pools--Processing, Supervising, and
Other. The costs in those activity cost pools appear below:
Processing
$
5,170
Supervising
$
31,640
Other
$
11,900
Processing costs are assigned to products using machine-hours
(MHs) and Supervising costs are assigned to products using the
number of batches. The costs in the Other activity cost pool are
not assigned to products. Activity data appear...
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...
Mirabile Corporation uses activity-based costing to compute
product margins. Overhead costs have already been allocated to the
company's three activity cost pools--Processing, Supervising, and
Other. The costs in those activity cost pools appear below:
Processing
$
4,025
Supervising
$
30,420
Other
$
10,700
Processing costs are assigned to products using machine-hours
(MHs) and Supervising costs are assigned to products using the
number of batches. The costs in the Other activity cost pool are
not assigned to products. Activity data appear...
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Hyundai Corporation uses activity-based costing to compute its
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company's three activity cost pools--Machining, Order Filling, and
Other. The data related to those costs in the activity cost pools
appears below:
Machining
$
10,952
Order Filling
$
25,604
Other
$
7,100
Machining costs are assigned to products using machine-hours
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Wedd Corporation uses activity-based costing to assign overhead
costs to products. Overhead costs have already been allocated to
the company's three activity cost pools as follows: Processing,
$46,700; Supervising, $33,600; and Other, $24,200. Processing costs
are assigned to products using machine-hours (MHs) and Supervising
costs are assigned to products using the number of batches. The
costs in the Other activity cost pool are not assigned to products.
Activity data appear below:
MHs (Processing)
Batches (Supervising)
Product O6
18,400
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Umanzor Corporation uses activity-based costing to assign
overhead costs to products. Overhead costs have already been
allocated to the company's three activity cost pools as follows:
Processing, $50,500; Supervising, $28,600; and Other, $24,700.
Processing costs are assigned to products using machine-hours (MHs)
and Supervising costs are assigned to products using the number of
batches. The costs in the Other activity cost pool are not assigned
to products. Activity data appear below:
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(Processing)
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Product S5
10,900
1,420
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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
$
82,000
Supervisory expense
$
12,100
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...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
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
$
30,000
Supervisory expense
$
14,800
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment depreciation
0.50
0.40
0.10
Supervisory expense
0.50
0.30
0.20
In the...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
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
$
103,000
Supervisory expense
$
13,100
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment depreciation
0.60
0.20
0.20
Supervisory expense
0.60
0.10
0.30
In the...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
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
$
92,000
Supervisory expense
$
4,000
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
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Equipment depreciation
0.60
0.20
0.20
Supervisory expense
0.30
0.20
0.50
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