$18,008 $23,600 $3,293 $32,200 Groch Corporation uses activity-based costing to

Question

$18,008 $23,600 $3,293 $32,200 Groch Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools-Processing, Supervising, and Other. The costs in those activity cost pools appear below: 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 appear below: Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins. What is the product margin for Product Q9 under activity-based costing?

Explanation / Answer

Hi,

Please find the answer as follows:

Processing Cost Allocated to Product Q9 = 29200*10200/20000 = 14892

Supervising Cost Alloacted to Product Q9 = 5700*1900/2000 = 5415

Product Margin:

Answer is Option C (3293).

Thanks.

Sales 120200 Less Direct Material 55600 Direct Labor 41000 Overheads
Processing 14892 Supervising 5415 Product Margin 3293

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