Question
Assume a company produces and sells only two products14,000 units of Product A and 6,000 units of Product B. The selling prices are $65 per
Assume a company produces and sells only two products14,000 units of Product A and 6,000 units of Product B. The selling prices are $65 per unit for Product A and $96 per unit for Product B. Product As direct materials and direct labor costs per unit are $30 and $12, respectively. Product Bs direct materials and direct labor costs per unit are $34 and $15, respectively. The company is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products A and B: Activity Cost Pool Activity Measure Estimated Overhead Cost Expected Activity Machining Machine-hours $ 300,000 15,000 MH Machine setups Number of setups $ 150,000 200 Setups Product design Number of products $ 78,000 2 Products Activity Measure Product A Product B Machine-hours 9,000 6,000 Number of setups 50 150 Number of products 1 1 Using the ABC system, what is the product margin for Product B? Garrison 17e Rechecks 2021-11-13 Multiple Choice $20,500 $5,500 $10,500 $15,500
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