In its first year of operations a company produced and sold 70,000 units of Product A...

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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: Direct materials Direct labor Manufacturing overhead Cost of goods sold Product B Product A $ 436,300 $ 200,000 $ 104,000 $ 251,700 Total $ 688,000 304,000 608,000 $ 1,600,000 The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows: Manufacturing Overhead Activity Cost Pool (and Activity Measure) Product A Machining (machine-hours) Setups (setup hours) Product design (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost $ 213,500 157,500 120,000 117,000 90,000 75 Activity Product B 62,500 Total 152,500 300 1 1 375 2 NA NA NA $ 608,000 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 ($400,700) was organization-sustaining in nature. How much of the company's total costs that would be included in its traditional absorption costing income statement should not be assigned to Product A or Product B by the activity-based costing system that the company uses for internal management purposes? Multiple Choice $637,700 $400,700 $517,700 $117,000 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: Direct materials Direct labor Manufacturing overhead Cost of goods sold Product B Product A $ 436,300 $ 200,000 $ 104,000 $ 251,700 Total $ 688,000 304,000 608,000 $ 1,600,000 The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows: Manufacturing Overhead Activity Cost Pool (and Activity Measure) Product A Machining (machine-hours) Setups (setup hours) Product design (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost $ 213,500 157,500 120,000 117,000 90,000 75 Activity Product B 62,500 Total 152,500 300 1 1 375 2 NA NA NA $ 608,000 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 ($400,700) was organization-sustaining in nature. How much of the company's total costs that would be included in its traditional absorption costing income statement should not be assigned to Product A or Product B by the activity-based costing system that the company uses for internal management purposes? Multiple Choice $637,700 $400,700 $517,700 $117,000