Scheuer Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment expense and indirect labor-to three activity cost pools-Processing, Supervising, and Other-based on resource consumption. Data to perform these allocations appear below:Overhead costs: Equipment expense$55,000Indirect labor$7,000??Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools ProcessingSupervisingOtherEquipment expense0.100.700.20Indirect labor0.500.100.40Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.Activity: MHs (Machining)Orders (Order Filling)Product Q!1,000700Product
S619,0001,300Total20,0002,000Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.Sales and Direct Cost Data: Product Q1Product S6Sales (total)$134,600$186,300Direct materials (total)$76,000$64,800Direct labor (total)$40,800$78,400What is the product margin for Product Q1 under activity-based costing?
A. -$13,200
B. $3,630
C. $17,350
D. $17,800
Answer: B
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