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

$

88,000

Supervisory expense

$

12,700

Distribution of Resource Consumption Across Activity Cost Pools:

Activity Cost Pools

Machining

Order Filling

Other

Equipment depreciation

0.50

0.30

0.20

Supervisory expense

0.50

0.20

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 W1

5,540

142

Product M0

15,800

924

Total

21,340

1,066

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

Sales and Direct Cost Data:

Product W1

Product M0

Sales (total)

$

73,000

$

63,800

Direct materials (total)

$

37,900

$

19,600

Direct labor (total)

$

16,300

$

35,100

What is the product margin for Product W1 under activity-based costing? (Round your intermediate calculations to 2 decimal places.)

Garrison 16e Rechecks 2018-07-24

Multiple Choice

$7,570

$1,870

$6,430

$2,650