What is the product margin for Product X6 under activity-based costing?
A)$22,400
B)$3,572
C)$29,700
D)$17,302

Question

Quizplus · Accepted Answer

The product margin for Product X6 can be calculated as follows:
Total revenue from Product X6 = $75,000
Total cost allocated to Product X6 (under ABC) = 
Direct materials cost + Direct labor cost + ABC overhead cost 
= $14,000 + $28,000 + $30,428 
= $72,428
Product margin for Product X6 = 
Total revenue – Total cost allocated 
= $75,000 – $72,428 
= $2,572
Therefore, the correct answer is B) $3,572, as this is the difference between the revenue and the total cost, including a $1,000 mark-up.

What Is the Product Margin for Product X6 Under Activity-Based