Musich Corporation has an activity-based costing system with three activity cost pools--Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, have been allocated to the cost pools already and are provided in the table below.Activity Cost Pools MachiningSetting UpOtherTotalEquipment depreciation$9000?$47,700?$23,400?$80,100?Indirect labor 3900? 2700? 3900? 10,500?Total$12,900?$50,400?$27,300?$90,600??Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's
costs appear below: MHsBatchesProduct Z35800?650?Product T16000?1250?Total11,800?1900?? Product Z3Product T1Sales (total)$226,800?$253,500?Direct materials (total)$83,000?$97,200?Direct labor (total)$109,600?$104,200?Required:a. Calculate activity rates for each activity cost pool using activity-based costing.Activity Cost PoolsActivity RateMachining?per MHSetting up?per batchb. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. ?Amount of Overhead CostProduct Z3?Product T1?c. Determine the product margins for each product using activity-based costing.?Product MarginProduct Z3?Product T1?
What will be an ideal response?
a.
| Activity Cost Pools | Activity Rate |
| Machining | $1.09? | per MH |
| Setting up | $26.53? | per batch |
| ? | Amount of Overhead Cost |
| Product Z3 | $23,567? |
| Product T1 | $39,703? |
| ? | Product Margin |
| Product Z3 | $10,633? |
| Product T1 | $12,397? |
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