Ask Question
26 December, 20:01

Spendlove Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Total Cost Total Activity Assembly $1,114,920 57,000 machine hours Processing Orders $47,016 1,800 orders Inspection $ 107,328 1,560 inspection-hours

The company makes 430 units of product S78N a year, requiring a total of 1,120 machine-hours, 40 orders, and 30 inspection-hours per year. The product's direct materials cost is $49.81 per unit and its direct labor cost is $12.34 per unit. The product sells for $129.90 per unit. According to the activity-based costing system, the product margin for product S78N is:

A. $4,116.50

B. $29,132.50 x

C. $6,180.50 x

D. $5,161.30

+1
Answers (1)
  1. 26 December, 22:45
    0
    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
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Spendlove Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Total Cost Total Activity ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers