Scheuer Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment expense and indirect labor--to three activity cost pools--Processing, Supervising, and Other--based on resource consumption. Data to perform these allocations appear below:

Overhead costs:
Equipment expense	$	55,000
Indirect labor	$	7,000

Distribution of Resource Consumption Across Activity Cost Pools:

	Activity Cost Pools
	Processing	Supervising		Other
Equipment expense	0.10	0.70		0.20
Indirect labor	0.50	0.10		0.40

In the second stage, 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 for the company's two products follow:

Activity:

	MHs (Processing)	Batches (Supervising)
Product Q1	1,000	700
Product S6	19,000	1,300
Total	20,000	2,000

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

Sales and Direct Cost Data:

	Product Q1		Product S6
Sales (total)	$	134,600	$	186,300
Direct materials (total)	$	76,000	$	64,800
Direct labor (total)	$	40,800	$	78,400

What is the product margin for Product Q1 under activity-based costing?

Multiple Choice

• -$13,200

• $3,630

• $17,800

• $17,350