4 Miami Valley Architects Inc. provides a wide range of engineering and architectural consulting services through its three branch offices in Columbus, Cincinnati, and Dayton, Ohio. The company allocates resources and bonuses to the three branches based on the net income of the period. The results of the firm's performance for the most recent year follows ($ in thousands): Columbus Cincinnati Dayton Total $ Sales $ $ 1,500 $ 1,419 1,067 3,986 Less: Direct labor 382 317 317 1,016 Direct 281 421 materials 185 887 Overhead 710 589 589 1,888 $ 127 $ 92 $ (24) $ 195 Net income Miami Valley accumulates overhead items in one overhead pool and allocates it to the branches based on direct labor dollars. For this year, the predetermined overhead rate was $1.859 for every direct labor dollar incurred by an office. The overhead pool includes rent, depreciation, and taxes, regardless of which office incurred the expense. Some branch managers complain that the overhead allocation method forces them to absorb a portion of the overhead incurred by the other offices. Management is concerned with the recent operating results. During a review of overhead expenses, management noticed that many overhead items were clearly not correlated to the movement in direct labor dollars as previously assumed. Management decided that applying overhead based on activity-based costing and direct tracing wherever possible should provide a more accurate picture of the profitability of each branch. An analysis of the overhead revealed that the following dollars for rent, utilities, depreciation, and taxes could be traced directly to the office that incurred the overhead ($ in thousands): Columbus Cincinnati Dayton Total Direct overhead $ 180 $ 270 $ 177 $ 627 Activity pools and their corresponding cost drivers were determined from the accounting records and staff surveys as follows: General administration Project costing Accounts receivable $ 409,000 48,000 Accounts payable/receiving 139,000 47,000 Payroll/Mail sort and 30,000 delivery Personnel recruiting 38,000 Employee insurance 14,000 processing Proposals 139,000 Sales meetings/Sales aids 202,000 Shipping 24,000 Ordering 48,000 Duplicating costs 46,000 Blueprinting 77,000 $ 1,261,000 Amount of Cost Driver Use by Location Cost Driver Columbus Cincinnati Dayton $ Direct labor cost $ 382,413 $ 317,086 317, 188 Timesheet entries 6,000 3,800 3,500 Vendor invoices 1,020 850 400 Client invoices 588 444 96 Employees 23 26 18 New hires 8 4 7 Insurance claims 230 260 180 filed Proposals 200 250 60 Contracted sales 1,824,439 1,399,617 571,208 Projects shipped Purchase orders Copies duplicated Blueprints 99 135 162,500 39,000 124 110 146,250 31,200 30 80 65,000 16,000 4 Purchase orders 135 Copies duplicated Blueprints 162,500 39,000 110 146,250 80 65,000 31,200 16,000 Required: 1. What overhead costs should be assigned to each branch based on ABC concepts? 2. What is the contribution of each branch before subtracting the results obtained in requirement 1? 3. What is the profitability of each branch office using ABC? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What overhead costs should be assigned to each branch based on ABC concepts? (Do not round intermediate calculations. Enter your answers in thousands of dollars, rounded to two decimal places.) Activity-based Overhead Allocation (in thousands) Cost Driver Columbus Cincinnati Dayton Total General administration Project costing Accounts payable/receiving Accounts receivable Payroll/Mail sort and delivery Personnel recruiting Employee insurance processing Proposals Direct labor cost Timesheet entries Vendor Invoices Client invoices Employees New hires Insurance claims filed Proposals Sales meetings/Sales aids Contracted sales Shipping Projects shipped Ordering Duplicating costs Purchase orders Copies duplicated Blueprinting Blueprints Total < Required 1 Required 2 > 4 Timesheet entries Vendor invoices 6,000 3,800 1,020 850 3,500 400 Client invoices 588 444 96 Employees 23 26 18 New hires 8 4 7 Insurance claims filed 230 260 180 Proposals 200 250 60 Contracted sales 1,824,439 1,399,617 571,208 Projects shipped Purchase orders 99 135 124 30 110 80 Copies duplicated Blueprints 162,500 39,000 146,250 65,000 31,200 16,000 Required: 1. What overhead costs should be assigned to each branch based on ABC concepts? 2. What is the contribution of each branch before subtracting the results obtained in requirement 1? 3. What is the profitability of each branch office using ABC? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the contribution of each branch before subtracting the results obtained in requirement 1? (Enter your answers in thousands of dollars.) Sales Less: Direct labor Less: Direct materials Less: Direct overhead Contribution margin Contribution of Each Branch (in thousands) Columbus Cincinnati Dayton Total Required 1 Required 3 > 4 Direct labor cost Timesheet entries Vendor invoices Client invoices Employees New hires cumbus $ 382,413 6,000 1,020 588 $ 317,086 Jay Lun $ 317,188 3,800 3,500 850 400 444 96 23 26 18 8 4 7 Insurance claims filed 230 260 180 Proposals 200 250 60 Contracted sales 1,824,439 1,399,617 571,208 Projects shipped Purchase orders 99 135 124 30 110 80 Copies duplicated Blueprints 162,500 39,000 146,250 65,000 31,200 16,000 Required: 1. What overhead costs should be assigned to each branch based on ABC concepts? 2. What is the contribution of each branch before subtracting the results obtained in requirement 1? 3. What is the profitability of each branch office using ABC? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the profitability of each branch office using ABC? (Enter your answers in thousands of dollars. Round your intermediate calculations and "Activity based overhead" to 2 decimal places.) Profitability of Each Branch Based on Activity-based Costing Contribution margin Activity-based overhead Operating income(loss) (in thousands) Columbus Cincinnati Dayton Total < Required 2 Required 3