Sarno Corporation has an activity based costing system with three activity cost pools Processing, Batch Setup, and Other Costs in the Processing cost pool are assigned to products based on machine hours (MHs) and costs in the Batch Setup cost pool are assigned to products based on the number of batches Costs in the Other cost pool are not assigned to products Data concerning the two products and the company's costs and activity based costing system appear below Activity Cost Pools Processing $3,000 Batch Setup $9,800 Other $9,200 MHs Batches Product 1 5,800 700 Product 2 4,200 300 Total 10,000 1,000 Product 1 Product 2 Sales (total) $45,300 $48,400 Direct materials (total) $19,600 $16,900 Direct labor (total) $15,900 $24,200 Required a Calculate activity rates for each activity cost pool using activity based costing b Determine the amount of overhead cost that would be assigned to each product using activity based costing c Determine the product margins for each product using activity based costing

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Question: Sarno Corporation has an activity-based costing system with three activity cost pools- Processing, Batch Setup, and Other. Costs in the Processing cost pool are assigned

Sarno Corporation has an activity-based costing system with three activity cost pools- Processing, Batch Setup, and Other. Costs in the Processing cost pool are assigned to products based on machine-hours (MHs) and costs in the Batch Setup cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs and activity-based costing system appear below:

Activity Cost Pools
Processing	$3,000
Batch Setup	$9,800
Other	$9,200

	MHs	Batches
Product #1	5,800	700
Product #2	4,200	300
Total	10,000	1,000

	Product #1	Product #2
Sales (total)	$45,300	$48,400
Direct materials (total)	$19,600	$16,900
Direct labor (total)	$15,900	$24,200

Required:

a. Calculate activity rates for each activity cost pool using activity-based costing.

b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

c. Determine the product margins for each product using activity-based costing.

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