Spendlove Corporation has provided the following data from its activity-based costing system:
| Activity Cost Pool | Total Cost | Total Activity |
| Assembly | $1,660,260 | 59,000 | machine-hours |
| Processing orders | $69,455.70 | 2,290 | orders |
| Inspection | $126,338 | 1,810 | inspection-hours |
|
The
company makes 780 units of product S78N a year, requiring a total of
1,140 machine-hours, 64 orders, and 36 inspection-hours per year. The
product's direct materials cost is $58.21 per unit and its direct labor
cost is $14.69 per unit. The product sells for $124.00 per unit.
|
|
According to the activity-based costing system, the product margin for product S78N is: (Round your intermediate calculations to 2 decimal places.)
|
| The activity rates for each activity cost pool are computed as follows: |
| | Total Cost | Total Activity | Activity Rate |
| Assembly | $1,660,260 | 59,000 | machine-hours | $28.14 | per machine-hour
|
| Processing orders | $69,456 | 2,290 | orders | $30.33 | per order |
| Inspection | $126,338 | 1,810 | inspection-hours | $69.80 | per inspection-hour |
| The overhead cost charged to Product S78N is: |
| | Activity Rate | Activity | ABC Cost |
| Assembly | $28.14 | per machine-hour
| 1,140 | machine-hours | $32,079.60 |
| Processing orders | $30.33 | per order | 64 | orders | 1,941.12 |
| Inspection | $69.80 | per inspection-hour | 36 | inspection-hours | 2,512.80 |
| Total overhead cost | | | | |
$36,533.52
|
| Sales (780 units × $124.00 per unit) | | $96,720.00 |
| Direct materials (780 units × $58.21 per unit) | $45,403.80 | |
| Direct labor (780 units × $14.69 per unit) | 11,458.20 | |
| Overhead | 36,533.52 | 93,395.52 |
| Product margin | |
$3,324.48
|
