ABC Corporation has an activity-based costing system with its total manufacturing overhead broken out into thres activity cost pools-Processing, Setting Up and Inspection Costs. in the Processing cost pool are assigned to products based on machine-hours (MHs). costs in the Setting Up cost pool are assigned to products based on the number of batches, and costs in the inspection cost pool are assigned to products based on number of inspections. Assume that the sales revenues for Product D7 and Product HO respectively, are $250,000 and $325,000

Data concerning the two products and the company's costs and activity-based costing system appear below

a) determine product margin for both products using activity based costing

b) determine product margin for both products using traditional costing and machine hours as the allocation base

Aetivitr Cost Ponis Prosestarim Settine vs 3 55kO0 inspection s 12.700 s. 28.500 ProductD7ProductHOTotalMHs8.00012.00020,000Batches2008001.000Inspections2.0008.00010,000 Direct materials HO $72,600 Direct labor $145.200 \$ 106,400 $96200