COTB MC Qu. 7-67 (Algo) In its first year of operations... In its first year of operations a company produced and sold 70,000 units of Product A at a selling price of $20 per unit and 17,500 units of Product B at a selling price of $40 per unit. Additional information relating to the company's only two products is shown below: Product A $436,300 $200,000 Product B $249,300 $104,000 Direct materials Direct labor Manufacturing overhead Cost of goods sold Total $ 685,600 304,000 608,000 $1,597,600 The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows: Activity Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product design (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost Manufacturing Overhead $213,500 157,500 120,000 117,000 $608,000 Product A Product B Total 90,000 62,500 152,500 75 300 375 1 1 2 NA NA NA The company's ABC implementation team also concluded that $50,000 and $100,000 of the company's advertising expenses could be directly traced to Product A and Product B, respectively. The remainder of its selling and administrative expenses ($400,000) was organization-sustaining in nature. SUD The company's ABC implementation team also concluded that $50,000 and $100,000 of the company's advertising expenses could be directly traced to Product A and Product B, respectively. The remainder of its selling and administrative expenses ($400,000) was organization-sustaining in nature. If the company uses a traditional cost system that relies on plantwide overhead allocation based on direct labor dollars, what is the total gross margin (or product margin) earned by Product B? Multiple Choice $158.400 $36,300 $138,700 $58,400 Next > 3 of 10 !!!