A company makes and sells three technology products: A, B, and C. It has a production plant with 17,000 square feet of floor area, consisting of machine setup

(2000 square feet), machining operation (9000 square feet), assembly (4000 square feet), and inspection, packaging, and shipping activities (2000 square feet).

The total annual expenditure for the plant is $200,000 for depreciation, $700,000 for utilities, $20,000 for phone and travel services, $150,000 for manufacturing supports,

$200,000 for procurement, and $150,000 for supervision.

The labor hours and material costs required to manufacture the products are shown in Table 6.17.

The labor charges are $25 per hour for machine setup, $35 per hour for machining operation, $30 per hour for assembly, and $20 per hour for inspection, packing, and shipping.

The company plans to sell Product A at $5000 per unit, Product B at $4,500 per unit, and Product C at $4,100 per unit. All products manufactured during the year are assumed to be sold successfully. Apply the activity-based costing technique to determine the product cost and individual gross margin for each product.