Burning River Corporation, a manufacturer of a variety of products, uses an activity-based costing system. Information from its system for the year for all products follows:
Burning River Corporation makes 750 of its product X14 a year, which requires a total of 55 machine hours, 20 inspection hours, and 18 orders. Product X14 requires $77.00 in direct materials per unit and $65.00 in direct labor per unit. Product X14 sells for $195 per unit.
Required:
a. Calculate the cost pool activity rate for each of the three activities.
b. How much manufacturing overhead would be allocated to Product X14 in total?
c. What is the profit margin in total for Product X14?

Question

Burning River Corporation, a manufacturer of a variety of products, uses an activity-based costing system. Information from its system for the year for all products follows:
  Burning River Corporation makes 750 of its product X14 a year, which requires a total of 55 machine hours, 20 inspection hours, and 18 orders. Product X14 requires $77.00 in direct materials per unit and $65.00 in direct labor per unit. Product X14 sells for $195 per unit.
Required:
a. Calculate the cost pool activity rate for each of the three activities.
b. How much manufacturing overhead would be allocated to Product X14 in total?
c. What is the profit margin in total for Product X14?

Quizplus · Accepted Answer

The Answer of Burning River Corporation, a manufacturer of a variety of products, uses an activity-based costing system. Information from its system for the year for all products follows:
  Burning River Corporation makes 750 of its product X14 a year, which requires a total of 55 machine hours, 20 inspection hours, and 18 orders. Product X14 requires $77.00 in direct materials per unit and $65.00 in direct labor per unit. Product X14 sells for $195 per unit.
Required:
a. Calculate the cost pool activity rate for each of the three activities.
b. How much manufacturing overhead would be allocated to Product X14 in total?
c. What is the profit margin in total for Product X14?

Burning River Corporation, a Manufacturer of a Variety of Products