Question
Advanced Products Corporation has supplied the following data from its activity-based costing system: Overhead Costs Wages and salaries $ 600,000 Other overhead costs 500,000 Total
Advanced Products Corporation has supplied the following data from its activity-based costing system: |
Overhead Costs | |||
Wages and salaries | $ | 600,000 | |
Other overhead costs | 500,000 | ||
Total overhead costs | $ | 1,100,000 | |
Activity Cost Pool | Activity Measure | Total Activity | |
Supporting direct labor | Number of direct labor-hours | 10,000 | DLHs |
Order processing | Number of customer orders | 500 | orders |
Customer support | Number of customers | 100 | customers |
Other | This is an organization-sustaining activity | Not applicable | |
Distribution of Resource Consumption Across Activities | ||||||||||
Direct Labor Support | Order Processing | Customer Support | Other | Total | ||||||
Wages and salaries | 20 | % | 30 | % | 20 | % | 30 | % | 100 | % |
Other overhead costs | 20 | % | 20 | % | 20 | % | 40 | % | 100 | % |
During the year, Advanced Products completed one order for a new customer, Shenzhen Enterprises. This customer did not order any other products during the year. Data concerning that order follow: |
Data Concerning the Shenzhen Enterprises Order | |||
Units ordered | 70 | units | |
Direct labor-hours | 0.6 | DLH per unit | |
Selling price | $ | 305 | per units |
Direct materials | $ | 276 | per unit |
Direct labor | $ | 22 | per DLH |
Required: | |
1. | Prepare a report showing the first-stage allocations of overhead costs to the activity cost pools. |
2. | Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) |
3. | Prepare a report showing the overhead costs for the order from Shenzhen Enterprises including customer support costs. (Round your intermediate calculations to 2 decimal places.) |
4. | Prepare a report showing the customer margin for Shenzhen Enterprises. |
5. | Prepare an action analysis report showing the customer margin for Shenzhen Enterprises. Direct materials should be coded as a Green cost, direct labor and wages and salaries as Yellow costs, and other overhead costs as a Red cost. |
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