Refer to the data for Silicon Optics in Exercise 8-18.

Required:

1. Using Exhibit 8A–1 as a guide, prepare a report showing the first-stage allocations of overhead costs to the activity cost pools.

2. Using Exhibit 8A–2 as a guide, compute the activity rates for the activity cost pools.

3. Using Exhibit 8A–3 as a guide, prepare a report showing the overhead costs for the order from Indus Telecom including customer support costs.

4. Using Exhibit 8–11 as a guide, prepare a report showing the customer margin for Indus Telecom.

5. Using Exhibit 8A–5 as a guide, prepare an action analysis report showing the customer margin for Indus Telecom. Direct materials should be coded as a Green cost, direct labor and wages and salaries as Yellow costs, and other overhead costs as a Red cost.

6. What action, if any, do you recommend as a result of the above analyses?

Data from Exercise 8-18.

During the year, Silicon Optics completed an order for a special optical switch for a new customer, Indus Telecom. This customer did not order any other products during the year. Data concerning that order follow:

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Overhead Costs Wages and salaries... $350,000 Other overhead costs 200,000 Total overhead costs . $550,000 Total Activity Activity Cost Pool Activity Measure Direct labor support . . Order processing . Customer support Number of direct labor-hours 10,000 DLHS Number of orders 500 orders Number of customers 100 customers These costs are not allocated Other to products or customers Not applicable Distribution of Resource Consumption Across Activity Cost Pools Direct Labor Order Customer Support Processing Support Other Total 35% Wages and salaries 30% 25% 10% 100% Other overhead costs .. 25% 15% 20% 40% 100%