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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:The following data pertain to Montrose Company's three products:
Unit sales per month
Selling price per unit
Variable costs per unit
Unit contribution margin
Batches
Setups
Direct fixed costs
Advertising
Supervision
Common fixed costs
Inspecting products
Materials handling
Customer service
Plant depreciation
General administration
Inspecting products
Materials handling
Customer service
M
9,000
Plant depreciation
General administration
$6.00
3.00
$3.00
5
6
$3,000
5,000
$10,000
4,000
5,000
6,000
8,000
N
14,000
$11.25.
9.00
$ 2.25
10.
3
When Montrose converted to ABC to help assess relevant decision making, it discovered the followin
20% of the inspection activity was unused. The
inspections used were based on the number of
batches produced.
8,000
$7.50
7.00
$0.50
$2,000 $1,000
5,000
5,000
The product margin for Product M using ABC would be
O 50.000
5
1
Facility-level cost
Facility-level cost
10% of the materials handling activity was unused.
The materials handling activity used was based on
the number of production runs.
50% of the customer service activity was unused.
The usage was given as follows: M 1,000, N 1000, O
500

Transcribed Image Text:The product margin for Product M using ABC would be
O
a. $9,000.
Ob. $19,000.
Oc. $13,840.
Od. $27,000.
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