Answer:
Product margin= $4,728
Explanation:
Giving the following information:
Processing $ 21,600
Supervising $ 3,700
MHs (Processing) Batches (Supervising)
Product Y7 3,700 400
Product V0 6,300 600
Total 10,000 1,000
First, we need to calculate the estimated overhead rate for each activity:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Pocessing= 21,600/10,000= $2.16 per machine hour
Supervising= 3,700/1,000= $3.7 per batch
Now, we can allocate overhead to product Y7:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Pocessing= 2.16*3,700= $7,992
Supervising=3.7*400= $1,480
Total= $9,472
Finally, we can determine the product margin:
Product Y7:
Sales (total)= 102,200
Direct materials= (40,800)
Direct labor= (47,200)
Allocated overhead= (9,472)
Product margin= $4,728
