Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the
Question:
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?
Expert Answer:
Calculation of product margin for Product M5 under activity based costing Product ... View the full answer
Cost Management Accounting and Control
ISBN: 978-0324559675
6th Edition
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan
