Question
Advanced Products Corporation has supplied the following data for its activity-based costing system: Overhead Costs: Wages and salaries $ 300,000 Other overhead cost 100,000 Total
Advanced Products Corporation has supplied the following data for its activity-based costing system:
Overhead Costs: |
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| $ 300,000 |
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| 100,000 |
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Total overhead costs | $400,000 |
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Activity cost pool | Activity Measure | Total Activity for the Year | ||||||||
Supporting direct labor | Number of direct labor-hours | 15,000 DLHs | ||||||||
Order processing | Number of customer orders | 500 orders | ||||||||
Customer support | Number of customers | 320 customers | ||||||||
other | This is an organization sustaining activity | Not applicable | ||||||||
Distribution of Resource Consumption Across Activities |
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| Supporting Direct Labor | Order Processing | Customer Support | Other | Total |
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Wages and salaries | 40% | 30% | 20% | 10% | 100% |
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Other overhead costs | 30% | 10% | 20% | 40% | 100% |
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During the year, Advanced Products completed one order for a new customer, Big Market. This customer did not order any other products during the year. Data concerning that order follow:
Data concerning the Big Market Order | |
Units ordered | 10 units |
Direct Labor-hours | 1.7 DLHs per unit |
Selling price | $370 per unit |
Direct materials | $190 per unit |
Direct labor | $80 per unit |
Required:
- Prepare a report showing the first-stage allocations of overhead costs to the activity cost pools.
- Compute the activity rates for the activity cost pools.
- Prepare a report showing the overhead costs for the order from Big Market including customer support costs.
- Prepare a report showing the customer margin for Big Market.
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