Question
Cancico Communications has supplied the following data for use in its ABC system: Overhead Costs Wages and salaries $ 295,000 Other overhead costs 163,000 Total
Cancico Communications has supplied the following data for use in its ABC system:
Overhead Costs | |||
Wages and salaries | $ | 295,000 | |
Other overhead costs | 163,000 | ||
Total overhead costs | $ | 458,000 | |
Activity Cost Pool | Activity Measure | Total Activity | |
Direct labour support | Number of direct labour-hours | 12,110 | DLHs |
Order processing | Number of orders | 500 | orders |
Customer support | Number of customers | 120 | customers |
Other | These costs are not allocated to products or customers | NA | |
Distribution of Resource Consumption across Activity Cost Pools | |||||||||||||||
Direct Labour Support | Order Processing | Customer Support | Other | Total | |||||||||||
Wages and salaries | 15 | % | 40 | % | 35 | % | 10 | % | 100 | % | |||||
Other overhead costs | 10 | % | 25 | % | 25 | % | 40 | % | 100 | % | |||||
During the year, Cancico Communications completed an order for special telephone equipment for a new customer, HurnTel. This customer did not order any other products during the year. Data concerning that order follow:
Selling price | $ | 216 | per unit |
Units ordered | 180 | units | |
Direct materials | $ | 194 | per unit |
Direct labour-hours | 0.6 | DLH per unit | |
Direct labour rate | $ | 24 | 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 HurnTel, including customer support costs. (Round your answers to 2 decimal places.)
4. Prepare a report showing the customer margin for HurnTel. (Round your answers to 2 decimal places.)
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