Assume that OfficeMart places orders more frequently, but everything else remains the same. On your worksheet increase the number of orders from 4 to 13. (Prior to completing this requirement, change all worksheet figures back to their original amounts)

Requirement 1

Data
Manufactoring overhead	$500,000
Selling and Administrative overhead	$300,000
	Assembling Units	Processing Orders	Supporting Customers	Other
Manufactoring overhead	50%	35%	5%	10%
Selling and Administrative overhead	10%	45%	25%	20%
Total Activity	1000	250	100
	units	orders	customers
Officemart orders:
Customers	1	customer
Orders	13	orders
Number of filing cabinets	80	units
Selling price	$595
Direct Materials	$180
Direct Labor	$50

a. What is the customer margin under activity-based costing when the number of orders increase to 13?

b. What is the product margin under the traditional costing system when the number of orders increase to 13?

Requirement 2.

Data
Manufactoring overhead	$500,000
Selling and administrative overhead	$300,000
	Assembling Units	Processing Orders	Supporting Customers	Other
Manufactoring overhead	50%	35%	5%	10%
Selling and administrative overhead	10%	30%	40%	20%
Total activity	1000	250	100
	units	orders	customers
Officemart orders:
Customers	1	Customer
Orders	13	orders
Number of filing cabinets ordered in total	80	units
Selling price	$595
Direct Materials	$180
Direct Labor	$50

a. Based on the numbers in requirement 2, what is the customer margin under activity based costing when the data are corrected?

b. Based on the numbers in requirement 2, what is the product margin under the traditional costing system when the data are corrected?