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5. Sandra's Sandwich Boards Inc. creates and prints sandwich boards for advertising outside restaurants. The sales manager wants to assess the profitability of Larry's Lunch,
5. Sandra's Sandwich Boards Inc. creates and prints sandwich boards for advertising outside restaurants. The sales manager wants to assess the profitability of Larry's Lunch, a long- time customer of Sandra's. During the second quarter, Larry's Lunch ordered sandwich boards from Sandra's, and Sandra's incurred the following revenue, activities and costs related to these orders: Selling price per board Number of boards sold Number of orders Number of shipments Direct materials per unit Direct labour hours per unit Direct labour rate per unit $350 6 2 3 $90 2.5 $34 The sales manager also wants to assign a portion of the company's overhead costs of $65,000 for the quarter and has set up the following activity cost pools in order to allocate the costs Total activity (for the quarter) Activity cost pool Order processing Customer support Shipping Other Activity measure Number of orders Number of customers Number of shipments Not allocated to customers 250 orders 50 shipments N/A Overhead rderC cent allocation Customer Wages and salaries Other overhead costs $30,000 $35,000 cost processing support Shipping Other Total 10% 100% 40% 100% 50% 35% 30% 20% 10% 5% What is the profit associated with Larry's Lunch? a) $297 b) $515 C) $1,347 d) $1,803
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