Feldpausch Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Total Cost Total Activity Assembly $1,586,690 66,500 machine-hours Processing orders $70,579 2,370 orders Inspection inspection $124,500 1,660 hours The company makes 600 units of product W26B a year, requiring a total of 2,030 machine-hours, 108 orders, and 33 inspection-hours per year. The product's direct materials cost is $52.59 per unit and its direct labor cost is $19.32 per unit. The product sells for $175.60 per unit. According to the activity-based costing system, the product margin for product W26B is:a. $13,134.56 b. $13,222.60 c. $10,572.56 d. $68,499.90

The product margin for product W26B is $7,997

Explanation:

Activity Assembly $1,586,690 for 66,500 machine-hours

-> Activity Assembly $23.86 per one machine-hour (=$1586690/66500)

Processing orders $70,579 for 2,370 orders

-> Processing orders $29.78 per one order (=$70579/2370)

Inspection inspection $124,500 for 1,660 hours

-> Inspection inspection $75 per one hour (=$124500/1660)

The company makes 600 units of product W26B a year, requiring a total of 2,030 machine-hours, 108 orders, and 33 inspection-hours per year

Activity cost = $23.86 x 2,030 + $29.78 x 108 + $75 x 33  = $54,217

Material cost = $52.59 x 600 = $31,554

Direct  labor cost = $19.32 X 600 = $11,592

Revenue for 600 units = $175.60 x 600 = $105,360

The product margin = revenue - all cost

= $105,360 - $54,217  - $31,554 - $11,592 = $7,997

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