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 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 company created an activity-based costing system that allocated all of its manufacturing overhead costs to four 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)	120,000	1	1	2
Other (organization-sustaining costs)	117,000	NA	NA	NA
Total manufacturing overhead cost	$ 608,000

If the company uses a traditional cost system that relies on plantwide overhead allocation based on direct labor dollars, what is the total gross margin (or product margin) earned by Product B?

Multiple Choice

• $136,300

• $146,300

• $163,600

• $153,600