Answer:
Option (A) is correct.
Explanation:
Given that,
Assembly:
Total Cost = $1,114,920
Total activity = 57,000
Processing orders:
Total Cost = $47,016
Total activity = 1,800
Inspection:
Total Cost = $107,328
Total activity = 1,560
Units produced = 430
Cost per activity for Assembly:
= Total Cost ÷ Total activity
= $1,114,920 ÷ 57,000
= $19.56
Cost per activity for Processing Orders:
= Total Cost ÷ Total activity
= $47,016 ÷ 1,800
= $26.12
Cost per activity for Inspection:
= Total Cost ÷ Total activity
= $107,328 ÷ 1,560
= $68.8
Cost for 430 unit Activities for Assembly:
= Cost per Activity × Activities for total 430 units
= $19.56 × 1,120 machine-hours
= $21,907.2
Cost for 430 unit Activities for Processing orders:
= Cost per Activity × Activities for total 430 units
= $26.12 × 40 orders
= $1,044.8
Cost for 430 unit Activities for Inspection:
= Cost per Activity × Activities for total 430 units
= $68.8 × 30 inspection-hours per year
= $2,064
Total costs:
= Cost for 430 unit Activities for Assembly + Cost for 430 unit Activities for Processing orders + Cost for 430 unit Activities for Inspection
= $21,907.2 + $1,044.8 + $2,064
= $25,016
Product margin for product S78N:
= Sales - Total Costs
= (430 × 129.90) - [430 x ($49.81 + $12.34)] - $25,016
= $55,857 - $26,724.5 - $25,016
= $4,116.5
