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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.

 

Activity:

 

 MHs

(Machining)Orders

(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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