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 | $ | 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 below:
| MHs (Processing) |
Batches (Supervising) |
|
| Product M0 | 10,900 | 650 |
| Product M5 | 600 | 650 |
| Total | 11,500 | 1,300 |
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
| Product M0 | Product M5 | |||
| Sales (total) | $ | 78,000 | $ | 91,400 |
| Direct materials (total) | $ | 28,800 | $ | 31,700 |
| Direct labor (total) | $ | 28,100 | $ | 42,000 |
What is the product margin for Product M5 under activity-based costing?
Multiple Choice
-
$17,700
-
$2,075
-
$2,280
-
$21,100
Solutions
Expert Solution
C) $2,280
| Particular | Total Cost | ABC allocation unit | per unit | |||
| processing cost | $4,025.00 | machine hours | ||||
| M01 | 10900 | |||||
| M05 | 600 | |||||
| 11500 | $0.35 | |||||
| supervisin | $30,420.00 | batch | ||||
| M01 | 650 | |||||
| M05 | 650 | |||||
| 1300 | $23.40 | |||||
| other | $10,700.00 | not to be allocated to prodcut | ||||
| already mentioned in question | ||||||
| M05 | ||||||
| Particulars | ABC allocation units | per unit | Value | |||
| sales | $91,400.00 | |||||
| materila | $31,700.00 | |||||
| labour | $42,000.00 | |||||
| processing cost | $600.00 | $0.35 | $210.00 | |||
| supervisin | $650.00 | $23.40 | $15,210.00 | |||
| Total Profit | $2,280.00 | |||||
| I hope my workings are enough to understand | ||||||
| Thanks in advance for giving me positive ratings | ||||||
| for any clarification feel free to comment on it | ||||||
| May God bless you and have a wonderful day | ||||||
ekkarill92 answered 1 year 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
$
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Supervising
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Other
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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
$
5,945
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...
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...
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these allocations appear below:
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supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data to perform
these allocations appear below:
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