Question

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

Activity Cost Pool	Total Cost		Total Activity
Assembly	$	1,471,965	60,500	machine-hours
Processing orders	$	54,224	1,850	orders
Inspection	$	152,154	2,140	inspection-hours

The company makes 1,230 units of product W26B a year, requiring a total of 1,380 machine-hours, 103 orders, and 39 inspection-hours per year. The product's direct materials cost is $52.21 per unit and its direct labor cost is $17.15 per unit. The product sells for $112.50 per unit.

According to the activity-based costing system, the product margin for product W26B is: (Round your intermediate calculations and final answers to 2 decimal places.)

• $13,694.97

• $53,062.20

• $16,467.87

• $16,713.90

Answer 1

Computation of ABC rate
Activity	OH Costs(Col 1)	No. of activity base(Col 2)	ABC rate(Col.1/Col.2)
Assembly	$                         14,71,965	60,500	24.33	per machine hours
Processing orders	$                              54,224	1,850	29.31	per orders
Inspection	$                           1,52,154	2,140	71.10	per inspection hours
Total Cost	$                         16,78,343
		Product W2B
	ABC rate	Activity Based usage	Cost allocated
Assembly	$                                24.33	1380	$                        33,575
Processing orders	$                                29.31	103	$                          3,019
Inspection	$                                71.10	39	$                          2,773
Total Overhead Costs			$                        39,367
Computation of Product Margin
Sales(1230 units*$112.50)	$                           1,38,375
Less:Direct Materials(1230 units*$52.21)	$                              64,218
Less:Direct labor(1230 units*$17.15)	$                              21,095
Less:Overhead Costs	$                              39,367
Product Margin	$                              13,695
So Option A is answer