Reference no: EM132974910
Mirabile 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$ 3,800; Supervising $ 23,800 ;Other $ 10,400
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:
MHs (Processing) Batches (Supervising )
Product M0 9,700 500
Product M5 300 500
Total 10,000 1,000
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
Product M0 Product M5
Sales (total)$ 74,100$ 89,900
Direct materials (total)$ 28,500$ 31,400
Direct labor (total)$ 27,800 $ 41,700
What is the product margin for Product M5 under activity-based costing?
Multiple Choice
-$18,000
-$2,686
-$16,800
-$4,786