Question

Wadsworth Industries manufactures small appliances and uses an activity- based costing system. Information from its system for the year for all products follows Actvity costpoal Assembly Inspection Packaging Total cost 463,000 $300,500 $18,600 Iotal activity 24,000 machine haurs 7,500 inspection-hours 1,700 order Wadsworth makes 875 of its stand mixers a year, which requires a total of 23 machine hours, 11 inspection hours, and 9 orders. The stand mixer requires $14.00 in direct materials per unit and $10.50 in direct labor per unit. The stand mixer sells for $110 per unit. What is the profit margin in total for the stand mixer? (Do not round intermediary calculations and round your final answer to the nearest cent.) O A. $21,437.50 O B. $73,829.59 O C. $96,321.00 O D. $24.50

Answer 1

Cost of manufacturing

Direct materials = 875 * 14 = 12250

Direct labor = 875 * 10.50 = 9187.50

Overhead = [(463,000/24000)*23 + (300500/7500)*11.+ 18600/1700 *9)

= 983

Total = 22420.50

Profit Margin = Sales - Cost of Goods Sold

= (875*110) - 22420.50

= 73829.50

Option B is the answer