Question

Feldpausch Corporation has provided the following data from its activity-based costing system Activity Cost Pool Assembly Processing orders Total Cost $1,137,360 Total Activity 84,000 machine-hours 1,100 orders 28,479 inspection Inspection $ 97,155 1,270 hours The company makes 470 units of product W268 a year, requiring a total of 660 machine-hours, 50 orders, and 40 inspection-hours per year. The product's direct materials cost is $40.30 per unit and its direct labor cost is $42.22 per unit. The product sells for $118.00 per unit According to the activity-based costing system, the product margin for product W26B is Multiple Choice $4679.20 $3.38470 $6,44470 $16,675.60

Answer 1

B 1 Solution:- 2 1. Calculation of profit margin for the W268 product under the company's Activity Based costing system 4 Particulars J78 5 Annual Production 470 Units 6 Sales (470 Units $118 per unit) 7 $55,460 9 Less :Direct material Costs (470 Units $40.30 per unit) 10 Less :Direct labor Costs (470 Units $42.22 per unit) $18,941 $19,843.40 11 Less :Overhead Costs 12 Assembly Costs ( W Note 1) 13 Production Order Costs (W Note 2) $8,936.40 $1,294.50 14 Inspection Costs (W Note 3) 15 $3,060 16 Profit Margin $3,384.70 17 18 19 W Note 1 Calculation of Assembly Costs 20 Activity Cost Pool 21 Total Costs 22 Total Activity Assembly $1,137,360 84000 Machine Hours 23 Activity Rate 24 Machine hours required to produce 470 Units 25 26 Overhead Costs = Total Expected Activity Activity Rate $ 13.54 per machine hour 660 Machine hours $8,936.40 27 Therefore, Assembly Costs (660 hours $ 13.54) 28

31 32 W Note 2 Calculation of Production Order Costs 33 Activity Cost Pool Production Order 34 Total Costs $28,479 1100 Orders 35 Total Activity 36 Activity Rate $ 25.84 per order 37 Orders required to produce 470 Units 50 Orders 38 39 Overhead Costs Total Expected Activity Activity Rate 40 Therefore,Production order Costs (50 Order *$ 25.84) $1,294.50 41 42 43 W Note 3 Calculation of Inspection Costs: 44 Activity Cost Pool 45 Total Costs 46 Total Activity 47 Activity Rate 48 Orders required to produce 470 Units Inspection $97,155 1270 Hours $ 76.50 per hour 40 Inspection hours 49 50 Overhead Costs = Total Expected Activity Activity Rate 51 Therefore,Inspection Costs (40 Hours $76.50) $3,060.00 52 53 54 55 56.