Goertz Corporation Has an Activity-Based Costing System with Three Activity

question 138

Multiple Choice

Goertz Corporation has an activity-based costing system with three activity cost pools--Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Distribution of Resource Consumption Across Activity Cost Pools:
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 for the company's two products follow:
Activity:
Finally, the costs of Machining and Order Filling are combined with the following sales and direct cost data to determine product margins.
Sales and Direct Cost Data:
What is the product margin for Product F7 under activity-based costing?

• A) $2,410
• B) $2,710
• C) $10,600
• D) $9,700

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