Brisky Corporation Uses Activity-Based Costing to Compute Product Margins

question 32

Multiple Choice

Brisky 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: 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. 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 I3 under activity-based costing?

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

---

Definitions:

Import Quotas

Restrictions set by a country on the amount or volume of goods that can be imported into the country over a set period of time.

Consumer Surplus

The discrepancy between what consumers are prepared to spend on a good or service and what they end up paying.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits to society from trading goods and services.

Tariffs

Taxes imposed by a government on imported goods and services to control trade volumes, protect domestic industries, or generate revenue.