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Musich Corporation has an activity-based costing system with three activity cost pools--Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation

Musich Corporation has an activity-based costing system with three activity cost pools--Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, have been allocated to the cost pools already and are provided in the table below.

Activity Cost Pools
Machining Setting Up Other Total
Equipment depreciation $ 7,400 $ 43,700 $ 21,800 $ 72,900
Indirect labor 1,500 1,900 3,100 6,500
Total $ 8,900 $ 45,600 $ 24,900 $ 79,400

Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs appear below:

MHs Batches
Product Z3 5,000 250
Product T1 5,200 850
Total 10,200 1,100

Product Z3 Product T1
Sales (total) $ 210,800 $ 245,500
Direct materials (total) $ 79,000 $ 95,600
Direct labor (total) $ 108,000 $ 100,200

Required:

a. Calculate activity rates for each activity cost pool using activity-based costing.

b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

c. Determine the product margins for each product using activity-based costing.

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