Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below:

Processing$6,250Supervising$36,040Other$12,200

Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:

MHs

(Processing)Batches

(Supervising)Product M011,800850Product M5700850Total12,5001,700

Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.

Product M0Product M5Sales (total)$87,100$98,900Direct materials (total)$30,300$33,200Direct labor (total)$29,600$43,500

What is the product margin for Product M5 under activity-based costing?

Multiple Choice

• $27,200
• $22,200
• $3,830
• $3,280