Question

Hopscotch​ Limited, a manufacturer of a variety of​ products, uses an activityminusbased costing system. Information from its system for the year for all products​ follows: Activity cost pool Total cost Total activity Assembly $ 584 comma 300 23 comma 000 machineminushours Inspection $ 340 comma 800 7 comma 500 inspectionminushours Packaging $ 24 comma 500 1 comma 400 order Hopscotch Limited makes 480 of its product B63 a​ year, which requires a total of 34 machine​ hours, 13 inspection​ hours, and 16 orders. Product B63 requires $ 40.70 in direct materials per unit and $ 63.20 in direct labor per unit. Product B63 sells for $ 275.00 per unit. What is the profit margin in total for Product​ B63? (Do not round intermediary calculations and round your final answer to the nearest​ cent.)

Answer 1

Answer:

The profit margin in total for Product​ B63 is $80,394

Explanation:

The computation of the profit margin is shown below:

= Sales - direct material cost - direct labor cost - assemble overhead - inspection overhead - packaging overhead

where,

Sales = Number of the number produced × selling price per unit

         = 480 × $275

         = $132,000

Direct material cost = Number of number produced × direct material per unit

= 480 × $40.70

= $19,536

Direct labor cost = Number of number produced × direct labor per unit

= 480 × $63.20

= $30,336

Assembly overhead = (Assembly cost  ÷ machine hours) × required machine hours

= ($584,300 ÷ 23,000) × 34 machine hours

= $863.75

Inspection overhead = (Inspection cost  ÷Inspection hours) × required Inspection hours

= ($340,800 ÷ 7,500) × 13 inspection hours

= $590.72

Packaging overhead = (Packaging cost  ÷ orders) × required orders

= ($24,500 ÷ 1,400) × 16 orders

= $280

Now put these values to the above formula  

So, the value would equal to

= $132,000 - $19,536 -  $30,336 - $863.75 - $590.72 - $280

= $80,393.53