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 Estimated Cost Pool Cost Cutting Sanding 360,000 Finishing 60,000 Expected Activity Drums $ 80,000 200 600 1,000 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 20.00 30.00 10.00 15.00