Flemming Corporation Uses Activity-Based Costing to Compute Product Margins

question 104

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:

Opportunity

A set of circumstances that makes it possible to do something or for something to happen.

External Customers

Individuals or entities that purchase goods or services from a business but are not part of the organization.

Internal Counterparts

The elements within an individual or system that correspond to or are analogous with external or opposing elements.

Directly

In a straight line or manner, without any intervening space, time, or substance.