Modern Products Company is applying activity based costing on its products costing. In this context the following data has been extracted from its cost accounting record:

Wages and salaries                   Rs. 600,000

Other overheads cost     Rs. 200,000

Total                                        Rs. 800,000

Activity cost pool                     Activity drivers                                   Total activity

Supporting direct labour            Number of direct labour            10,000 direct labour hours

Order processing                       Number of customer orders                   200 orders

Customers support                    Number of customers                100 customers

Distribution of resources utilization was as under:

            Supporting                  Order                Customer           Total

                                                Directlabour              processing           support

Wages and Salaries                               50%                    30%                    20%                 100%

Other overheads cost                            40%                    30%                    30%                  100%

During current month the company has executed one order for a new customer namely Ali Traders. This customer did not order any other products during the period. The salient data concerning the foregoing customer is as under:

Units ordered                                        20 units

Direct labour hours                               4 hours per unit

Selling price                                         Rs. 1,000 per unit

Direct material cost                               Rs. 300 per unit

Direct labour                                        Rs. 100 per unit

 

Required

a. Compute the allocation of overheads cost to activity cost pools.

b. Determine the activity rates of each cost pool.

c. Allocate the overheads cost to the customer- Ali Traders for execution of his order.

d. Draw a customer margin report in respect of Ali Traders.