Koutz Corporation Uses Activity-Based Costing to Compute Product Margins

question 25

Multiple Choice

Koutz 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 O7 under activity-based costing?

• A)$46, 400
• B)$10, 111
• C)-$600
• D)$14, 271

---

Definitions:

John Harvey Kellogg

An American medical doctor, nutritionist, inventor, health activist, and businessman known for the invention of corn flakes and other health foods.

Wrong Pedigree

The perceived lack of appropriate or desirable background, heritage, or lineage, often used in contexts where social prestige or lineage is valued or required.

Declaration of War

A formal announcement by one country that it is in a state of war with another.

President Wilson

Refers to Woodrow Wilson, the 28th President of the United States (1913-1921), known for leading the country through World War I and advocating for the League of Nations.