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Advanced Products Corporation has supplied the following data from its activity-based costing system: Overhead Costs Wages and salaries $ 300,000 Other overhead costs 100,000 Total
Advanced Products Corporation has supplied the following data from its activity-based costing system:
Overhead Costs | |
---|---|
Wages and salaries | $ 300,000 |
Other overhead costs | 100,000 |
Total overhead costs | $ 400,000 |
Activity Cost Pool | Activity Measure | Total Activity for the Year | ||
---|---|---|---|---|
Supporting direct labor | Number of direct labor-hours | 20,000 | DLHs | |
Order processing | Number of customer orders | 400 | orders | |
Customer support | Number of customers | 200 | customers | |
Other | This is an organization- sustaining activity | Not applicable |
Distribution of Resource Consumption Across Activities | ||||||
---|---|---|---|---|---|---|
Supporting Direct Labor | Order Processing | Customer Support | Other | Total | ||
Wages and salaries | 40% | 30% | 20% | 10% | 100% | |
Other overhead costs | 30% | 10% | 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 | 10 | units |
Direct labor-hours | 2 | DLHs per unit |
Selling price | $ 300 | per unit |
Direct materials | $ 180 | per unit |
Direct labor | $ 50 | 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.
- Calculate the total overhead costs for the order from Shenzhen Enterprises including customer support costs.
- Calculate the customer margin for Shenzhen Enterprises.
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