Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated...
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Accounting
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
$
3,740
Supervising
$
27,840
Other
$
10,600
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
10,450
600
Product M5
550
600
Total
11,000
1,200
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
Product M0
Product M5
Sales (total)
$
75,700
$
90,900
Direct materials (total)
$
28,700
$
31,600
Direct labor (total)
$
28,000
$
41,900
What is the product margin for Product M5 under activity-based costing?
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