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Doede Corporation uses activity-based costing to compute product margins.

Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment depreciation and supervisory expense--to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below:


Overhead costs:


  Equipment depreciation$98,000Supervisory expense$13,400


Distribution of Resource Consumption Across Activity Cost Pools:


 Activity Cost Pools MachiningOrder FillingOtherEquipment depreciation0.600.200.20Supervisory expense0.600.100.30


In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products.






(Order Filling)Product W16,060112Product M014,700975Total20,7601,087


Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.


Sales and Direct Cost Data:


  Product W1Product M0Sales (total)$83,550$68,400Direct materials (total)$38,500$22,400Direct labor (total)$22,000$33,700


What is the product margin for Product W1 under activity-based costing?

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