What Is the Product Margin for Product I6 Under Activity-Based

question 32

Multiple Choice

What is the product margin for Product I6 under activity-based costing?

• A)$2,000
• B)$36,000
• C)$11,928
• D)$23,688

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Definitions:

Variable Manufacturing Costs

Costs that vary directly with the level of production, including expenses like raw materials and direct labor.

Variable Costing Income

An income calculation method that only includes variable costs - costs that fluctuate with production levels - in determining net income.

Absorption Costing Income

A company's income statement approach which includes all costs of production (both fixed and variable) in the cost of goods sold, thereby fully absorbing them.

Variable Cost Ratio

The proportion of variable costs to sales, showing the impact of production volume on total costs.