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Assume a company produces and sells only two products-14,000 units of Product A and 6,000 units of Product B. The selling prices are $65
Assume a company produces and sells only two products-14,000 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 A's direct materials and direct labor costs per unit are $30 and $12. respectively. Product B's 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 Machining Machine setups Product design Activity Measure Machine-hours Number of setups Number of products Estimated Overhead Cost $300,000 $150,000 $ 78,000 Expected Activity 15,000 MH 200 Setups 2 Products Activity Measure Machine-hours Number of setups Product A Product B 9,000 6,000 50 150 Number of products 1 1 Using the ABC system, what is the product margin for Product A?
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