Flemming Corporation Uses Activity-Based Costing to Compute Product Margins

question 111

Multiple Choice

Flemming Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Machining, Order Filling, and Other. The costs in those activity cost pools appear below: Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:
Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.
What is the product margin for Product U6 under activity-based costing?

• A) $45,100
• B) $11,296
• C) $25,036
• D) $8,600

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Definitions:

Independent Variables

Elements in research or a scenario that are altered or sorted to explore their influence on response variables.

Regression Equation

An equation that expresses the linear relationship between one or more independent variables and a dependent variable.

Variation

The measure of dispersion within a dataset, indicating how much individual data points differ from the average value.

First-order Model

A simple linear model that describes a relationship between two variables with a direct correlation, without considering complex interactions.