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In its first year of operations a company produced and sold 70,000 units of Product A and 17,500 units of Product B. Additional information relating

In its first year of operations a company produced and sold 70,000 units of Product A and 17,500 units of Product B. Additional information relating to the companys only two products is shown below:

Product A Product B Total
Direct materials $ 436,300 $ 251,700 $ 688,000
Direct labor $ 200,000 $ 104,000 $ 304,000

The companys direct labor wage rate is $20 per hour. It created an activity-based costing system that allocated all of its manufacturing overhead costs to three activities as follows:

Activity Cost Pool (and Activity Measure) Manufacturing Overhead Activity
Product A Product B Total
Machining (machine-hours) $ 213,500 90,000 62,500 152,500
Setups (setup hours) 157,500 75 300 375
Product design (number of products) 237,000 1 1 2
Total manufacturing overhead cost $ 608,000

According to the companys activity-based costing system, the total product cost assigned to Product A would be:

Multiple Choice

$922,300.

$902,300.

$912,300.

$908,300.

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