Basanova Company makes two musical instruments: Drums and Guitars. The annual production and sales level of Drums is 18,000 units. The annual production and sales level of Guitars is 32,000. The company uses activity-based costing and has prepared the following analysis showing the estimated total cost and expected activity for each of its three activity cost pools:

The following information is also available:

Compute the profit margin for Drums and Guitars using activity-based costing. Compute it both on a product line and a per unit basis.

Activity Cost Pool Estimated Cost $ 80,000 200 600 1,000 Expected Activity Drums Cutting Sanding 360,000 Finishing 60,000 Guitars 800 5,400 500 Total Activity 1,000 6,000 1,500 (In Dollars) Sales price per unit Direct material per unit Direct labor per unit Drums Guitars $100.00 150.00 30.00 15.00 20.00 10.00