Donnati Corporation Has Provided the Following Data from Its Activity-Based

question 15

Multiple Choice

Donnati Corporation has provided the following data from its activity-based costing system:
$$\begin{array} { l c l} \text { Activity Cost Pool } & \text { Total Cost } & \text { Total Activity } \\\text { Assembly } & \$ 383,180 & 23,000 \text { machine-hours } \\\text { Processing orders } & \$ 50,798 & 1,100 \text { orders } \\\text { Inspection } & \$ 106,110 & 1,620 \text { inspection-hours }\end{array}$$
Data concerning one of the company's products, Product A43V, appear below:
$\begin{array}{llr} \text {Selling price per unit } &\$124.60\\ \text { Direct materials cost per unit } &\$22.08\\ \text { Direct labor cost per unit} &\$45.77\\ \text {Annual unit production and sales } &210\\ \text { Annual machine-hours } &320\\ \text {Annual orders } &80\\ \text { Annual inspection-hours } &10\end{array}$

According to the activity-based costing system, the product margin for Product A43V is:

• A) $2,891.90.
• B) $5,931.30.
• C) $11,917.50.
• D) $2,236.90.

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Definitions:

Dollar Exposure

The extent to which a company or investment is affected by changes in the US dollar value, particularly in foreign exchange risk.

Call Delta

A measure of the sensitivity of an option's price to a change in the price of the underlying asset.

Volatility Risk

The risk in the value of options portfolios due to unpredictable changes in the volatility of the underlying asset.

Hedge Ratio

A ratio used to measure the proportion of a position that is hedged or the amount of assets used to hedge a risk exposure.