Mirabile Corporation Uses Activity-Based Costing to Compute Product Margins

question 347

Multiple Choice

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 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:
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
What is the product margin for Product M5 under activity-based costing?

• A) $23,100
• B) $19,200
• C) $1,855
• D) $1,345

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Definitions:

Suppliers

Businesses or individuals that provide goods or services to other companies or end consumers.

Purchase Decision-Making

The process through which consumers or organizations decide whether or not to buy a product or service, considering various factors and influences.

Actual Purchase

Actual purchase refers to the completion of buying goods or services, marking a finalized transaction.

Close Customer Contact

A business strategy emphasizing direct and frequent interaction with customers to tailor services or products to their needs.