3. OfficeMart has found an error in its data. The percentage of selling and administrative overhead attributable to processing orders should be changed to 35% from 45% and the percentage attributable to supporting customers should be changed to 35% from 25%. 1 Chapter 7: Applying Excel 3 4 5 Data Manufacturing overhead Selling and administrative overhead $ $ 500,000 300,000 Assembling Units Other 8 50% Manufacturing overhead Selling and administrative overhead Total activity 9 Processing Orders 35% 35% 250 orders 10% 20% Supporting Customers 5% 35% 100 customers 10% 1,000 units 10 12 14 OfficeMart orders: Customers 15 Orders 1 customer 7 orders 80 units 595 Number of filing cabinets ordered in total Selling price Direct materials Direct labor 180 19 $ (a) Based on new number of orders in Requirement 2, what is the customer margin under activity-based costing when the data are corrected? (Enter a loss as a negative amount.) Customer margin under activity-based costing (b) Based on new number of orders in Requirement 2, what is the product margin under the traditional costing system when the data are corrected? (Enter a loss as a negative amount.) Product margin under the traditional costing system (c) Which of the following statements are true about what happens when the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) 2 When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, costs are shifted from the processing orders cost pool to the supporting customers cost pool. 2 When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, costs will be shifted from customers who order more frequently to those who order less frequently. 7 When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, the customer margins of those who order more frequently will increase relative to the customer margins of those who order less frequently