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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 per
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: Estimated Activity Cost Pool Activity Measure 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 A? Multiple Choice
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