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	$ 74,000
Supervisory expense	$ 6,800

Distribution of Resource Consumption Across Activity Cost Pools:

	Activity Cost Pools
	Machining	Order Filling	Other
Equipment depreciation	0.40	0.30	0.30
Supervisory expense	0.40	0.20	0.40

In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products.

Activity:

	MHs (Machining)	Orders (Order Filling)
Product W1	6,110	136
Product M0	16,900	958
Total	23,010	1,094

Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

Sales and Direct Cost Data:

	Product W1	Product M0
Sales (total)	$ 77,200	$ 66,800
Direct materials (total)	$ 34,400	$ 17,200
Direct labor (total)	$ 22,800	$ 29,200

What is the product margin for Product W1 under activity-based costing?

Answer rating: 100% (QA)

Product Margin is the difference between Sales and total manufacturing cost Manufacturing Cost inclu... View the full answer