Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Brisky Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-to

Brisky Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-to three activity cost pools-Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below:

Overhead costs:
Equipment depreciation $23,000
Supervisory expense $12,000
Distribution of Resource Consumption Across Activity Cost Pools:

Activity Cost Pools

Machining Order Filling Other
Equipment depreciation 0.60 0.20 0.20
Supervisory expense 0.60 0.10 0.30

In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products.

Activity:
MHs (Machining) Orders (Order Filling)
Product I3 6,250 145
Product U8 23,400 1,000
Total

29,650

1,145

Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

Sales and Direct Cost Data:
Product I3 Product U8
Sales (total) $67,200 $63,300
Direct materials (total) $31,700 $15,600
Direct labor (total) $23,100 $31,300

What is the product margin for Product I3 under activity-based costing? (Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing IT Infrastructures For Compliance

Authors: Robert Johnson, Marty Weiss, Michael G. Solomon

3rd Edition

1284236609, 9781284236606

More Books

Students also viewed these Accounting questions