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Doede 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
Doede 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 Supervisory expense $ 92,000 $ 4,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Order Filling 0.20 0.20 Machining 0.60 0.30 Equipment depreciation Supervisory expense Other 0.20 0.50 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: Orders (Order Filling) 800 200 MHs (Machining) 4,200 15,800 20,000 Product W1 Product Me Total 1,000 Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins. Sales and Direct Cost Data: Sales (total) Direct materials (total) Direct labor (total) Product W1 $ 236,500 $ 90,900 $ 110,400 Product MO $ 262,000 $ 123,900 $ 76, 100 What is the product margin for Product W1 under activity-based costing? Multiple Choice $23,356 -$12,800 $35,200 $7,996
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