Doede Corporation Uses Activity-Based Costing to Compute Product Margins

question 268

Multiple Choice

Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment depreciation and supervisory expense--to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Distribution of Resource Consumption Across Activity Cost Pools:
In the second stage, 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:
Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.Sales and Direct Cost Data:
What is the product margin for Product W1 under activity-based costing? (Round your intermediate calculations to 2 decimal places.)

• A) $6,400
• B) $3,040
• C) $7,600
• D) $3,820

---

Definitions:

Functional

Relates to the specific role or purpose something serves within a larger system or structure.

Divisional

Pertains to a business structure where operations are segmented based on product lines, markets, or geographical areas.

Geographical Structures

Organizational structures that are arranged based on geographical regions or territories.

Market Area

A geographical region or demographic group in which a company's products or services are marketed and sold.