The company makes 770 units of product S78N a year, requiring a total of 1,800 m

Question

The company makes 770 units of product S78N a year, requiring a total of 1,800 machine-hours, 48 orders, and 35 inspection-hours per year. The product's direct materials cost is $51.46 per unit and its direct labor cost is $13.35 per unit. The product sells for $135.40 per unit.

Spendlove Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Assembly Processing orders Inspection Total Cost $1,495,676 $53,658.00 Total Activity 58,700 machine-hours 1,800 orders 2,100 inspection-hours $147,420 The company makes 770 units of product S78N a year, requiring a total of 1,800 machine-hours, 48 orders, and 35 inspection-hours per year. The product's direct materials cost is $51.46 per unit and its direct labor cost is $13.35 per unit. The product sells for $135.40 per unit. According to the activity-based costing system, the product margin for product S78N is: (Round your intermediate calculations to 2 decimal places.) O $7,059.42 O $6,033.30 $4,602.42 O $54,354.30 O $54,354 30

Explanation / Answer

Product Cost Statement for 770 units:   (Amount in $)

1. Assembly =1495676/58700*1800 = 45864

2.Processing orders =53658/1800*48 = 1430.88

3.inspection = 147420/2100*35 = 2457

4.Direct Material=51.46*770 = 39624

5.Direct Labour =13.35 *770 = 10279.5

Total cost for 770 units(b)   99655.58

Product Sales Value(a)=135.40*770 = 104258.00

Margin (a)-(b) = 4602.42

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