The Following Data Pertains to the Montrose Company's Three Products

Multiple Choice

The following data pertains to the Montrose Company's three products: $$\begin{array} { l r r r } & \mathrm { M } & \mathrm { N } & \mathrm { O } \\\text { Unit sales per month } & \underline { 9,000 } & \underline { 14,000 } & \underline { 8,000 } \\\text { Selling price per unit } & \$ 6.00 & \$ 11.25 & \$ 7.50 \\\text { Variable costs per unit } & \underline { 3.00 } & \frac { 9.00 } { 2.00 } & \underline { 7.00 } \\\text { Unit contribution margin } & \$ 3.00 & \$ 2.25 & \$ 0.50 \\\text { Batches } & 5 & 10 & 5 \\\text { Setups } & 6 & 3 & 1 \\\text { Direct fixed costs } & & & \\\text { Advertising } & \$ 3,000 & \$ 2,000 & \$ 1,000 \\\text { Supervision } & 5,000 & 5,000 & 5,000 \\\text { Common fixed costs } & & & \\\text { Inspecting products } ( \$ 10,000 ) & & & \\\text { Materials handling } ( \$ 4,000 ) & & & \\\text { Customer service } ( \$ 5,000 ) & & & \\\text { Plant depreciation } ( \$ 6,000 ) & & & \\\text { General administration } ( \$ 8,000 ) & & &\end{array}$$ When Montrose converted over to ABC it discovered the following: $$\begin{array} { l c l } \text { Inspecting products } & - & \begin{array} { l } 20 \% \text { of the inspection activity was unused. The } \\\text { inspections used were based on the number of batches } \\\text { produced. }\end{array} \\\text { Materials handling } & - & \begin{array} { l } 10 \% \text { of the materials handling activity was unused. } \\\text { The materi als handling activi ty used was based on the } \\\text { number of production runs. }\end{array} \\\text { Customer service } & - & \begin{array} { l } 50 \% \text { of the customer service activity was unused. The } \\\text { usage was given as follows: M } 1,000 , N 1000,0500 \\\text { facility level cost } \\\end{array}\\\text { General administration }&-&\text { facility level cost }\end{array}$$ The product margin for product M using ABC would be

A) $9,000.
B) $19,000.
C) $13,840.
D) $27,000.