Question

Feldpausch Corporation has provided the following data from its activity-based costing system:Activity Cost Pool Total Cost Total ActivityAssembly $ 1,150,100 62,000 machine-hoursProcessing orders $ 54,554 1,860 ordersInspection $ 194,310 2,550 inspection-hoursThe company makes 990 units of product W26B a year, requiring a total of 1,610 machine-hours, 65 orders, and 30 inspection-hours per year. The product's direct materials cost is $52.35 per unit and its direct labor cost is $17.21 per unit. The product sells for $115.45 per unit.According to the activity-based costing system, the product margin for product W26B is: (Round your intermediate calculations and final answers to 2 decimal places.)

Answer 1

Product margin= $11.03

Step-by-step explanation:

First, we need to calculate the activities rates:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Assembly= 1,150,100 / 62,000= $18.55 per machine-hour

Processing orders= 54,554 / 1,860= $29.33 per order

Inspection= 194,310 / 2,550= $76.2 per inspection-hour

Now, we can allocate overhead to Product W26B:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Assembly= 18.55*1,610= $29,865.5

Processing orders= 29.33*65= $1,906.45

Inspection= 76.2*30= 2,286

Total allocated costs= $34,057.95

Unitary allocated overhead= 34,507.95 / 990= $34.86

Finally, the unitary cost and product margin:

Total unitary cost= 34.86 + 52.35 + 17.21= $104.42

Product margin= 115.45 - 104.42

Product margin= $11.03