Question

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: 3.33 points (8 Equipment depreciation Supervisory expense $22,000 $ 6,000 01:54:13 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Order Filling 0.30 0.20 Machining 0.50 0.50 Equipment depreciation Supervisory expense Other 0.20 0.30 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 Product W1 Product Mo Total MHS (Machining) 5,400 14,600 20,000 Orders (Order Filling) 100 900 1,000 Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins. Sales and Direct Cost Data: Sales (total) Direct materials (total) Direct labor (total) Product W1 $53,300 $29,700 $16,000 Product MO $60,100 $14,000 $25,300 What is the product margin for Product W1 under activity-based costing? (Round your intermediate calculations to 2 decimal places.)

Answer 1

				Order
			Machining	Filling	Other
Equipment Depreciation			11000	6600	4400
Supervisory Expense			3000	1200	1800
total overhead expense			14000	7800	6200
Second stage
			Maching	orders	total
Product W1			3780	780	4560
Product M0			10220	7020	17240
Total expense distributed			14000	7800	21800
Machining per hr=		14000/20000		0.70
per order cost =		7800/1000		7.80
	product margin of W1
	sales			53,300
	less:
	Direct materials			29,700
	Direct labor			16,000
	overhead			4,560
	product margin			3,040	answer