Narayan 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..................... $27,200 $6,800 $34,000 $68,000

Indirect labor ......................................... $ 2,500 $1,000 $1,500 $ 5,000

Total.......................................................... $29,700 $7,800 $35,500 $73,000 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 Z9......................................... 4,400 400

Product Q2........................................ 5,600 1,600

Total....................................................... 10,000 2,000

Product Z9 Product Q2

Sales (total)........................................$137,900 $173,300

Direct materials (total)..................$ 59,700 $43,400

Direct labor (total) $ 57,500 $96,000 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.