Red Stone Manufacturing, a manufacturer of a variety of products, uses an activity-based costing system. Information from its system for the year for all products follows: Red Stone Manufacturing makes 400 of its product B34 a year, which requires a total of 52 machine hours, 15 inspection hours, and 20 orders. Product B34 requires $75.50 in direct materials per unit and $68.80 in direct labour per unit. Product B34 sells for $180 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 B34 in total?
C. What is the product margin in total for Product B34?

Question

Red Stone Manufacturing, a manufacturer of a variety of products, uses an activity-based costing system. Information from its system for the year for all products follows:  Red Stone Manufacturing makes 400 of its product B34 a year, which requires a total of 52 machine hours, 15 inspection hours, and 20 orders. Product B34 requires $75.50 in direct materials per unit and $68.80 in direct labour per unit. Product B34 sells for $180 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 B34 in total?
C. What is the product margin in total for Product B34?

Quizplus · Accepted Answer

The Answer of Red Stone Manufacturing, a manufacturer of a variety of products, uses an activity-based costing system. Information from its system for the year for all products follows:  Red Stone Manufacturing makes 400 of its product B34 a year, which requires a total of 52 machine hours, 15 inspection hours, and 20 orders. Product B34 requires $75.50 in direct materials per unit and $68.80 in direct labour per unit. Product B34 sells for $180 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 B34 in total?
C. What is the product margin in total for Product B34?

Red Stone Manufacturing, a Manufacturer of a Variety of Products