Question

Feldpausch Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Total Cost Total Activity Assembly $ 1,398,250 65,800 machine-hours Processing orders $ 69,451 2,520 orders Inspection $ 184,800 2,400 inspection-hours The company makes 920 units of product W26B a year, requiring a total of 1,290 machine-hours, 61 orders, and 40 inspection-hours per year. The product's direct materials cost is $57.55 per unit and its direct labor cost is $13.56 per unit. The product sells for $123.50 per unit. According to the activity-based costing system, the product margin for product W26B is:

Answer 1

Answer:

$16,125.15

Explanation:

DATA:

Activity Cost Pool       Total Cost           Total Activity

Assembly                   $1,398,250           65,800 machine hours

Processing orders      $ 69,451              2,520 orders

Inspection                   $ 184,800             2,400 inspection-hours

Units produced = 920

Machine hours required = 1290

Processing orders required= 61

Inspection hours required = 40

Direct material cost = 57.55

Direct labor cost = 13.56 per unit

Selling price = 123.50

Solution

Sales Revenue (920 ×$123.5)                                   $113,620

LESS: Costs  

Direct Materials (920 × $57.55)                                $52,946

Direct labor (920 ×$13.56)                                        $12,375.2  

Assembly (1,398,250/65,800) = 21.25 × 1290=       $27412.5  

Processing (69,451/2,520) = 27.55 × 61 =               $1681.15

Inspection (184,800/2,400) = 77 x 40 =                   $3080        

Total Cost                                                               ($97494.65)      

Product margin                                                         $16,125.15