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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:

1. Prepare a report showing the first-stage allocations of overhead costs to the activity cost pools.

Prepare a report showing the first-stage allocations of overhead costs to the activity cost pools.

Direct Labor Order Customer
Support Processing Support Other Totals
Wages and salaries
Other overhead costs
Total cost

2. Compute the activity rates for the activity cost pools.

Compute the activity rates for the activity cost pools. (Round the "Direct labor support" to 2 decimal places.)

Activity Cost Pool Activity Rate
Supporting direct labor per DLH
Order processing per order
Customer support per customer

3. Calculate the total overhead costs for the order from Shenzhen Enterprises including customer support costs.

Calculate the total overhead costs for the order from Shenzhen Enterprises including customer support costs.

Activity Cost Pool ABC Cost
Supporting direct labor
Order processing
Customer support
Total

4. Calculate the customer margin for Shenzhen Enterprises.

Calculate the customer margin for Shenzhen Enterprises.

Shenzhen Enterprises
Customer MarginABC Analysis
Costs:
Customer margin

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