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estimated Assume a company produces and sells only two products --54,000 units of Product A and 6,000 units of Product B. The selling prices are
estimated Assume a company produces and sells only two products --54,000 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 $31 and $12, respectively. Product Bs 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 avaliable for the company as a whole and for Products A and B: Activity Cost Pool Activity Measure Overhead cost Expected Activity Machining Machine-hours $300,000 12,500 MH Machine setups Number of setups $150,000 200 Setups Product design Number of products $ 78,000 2 Products Activity Measure Machine-hburn Number of setups Number of products Product 9,000 50 1 Product 6,000 150 1 Using the ABC system, what is the product margin for Product A? Multiple Choice $54,500 $45.000 0 374,000 515,500
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