Comprehensive Activity-Based Costing Exercise Refer to the data for Advanced Products Corporation in Exercise 6-15. Required: 1. Using Exhibit 6A-1 as a guide, prepare a
Comprehensive Activity-Based Costing Exercise
Refer to the data for Advanced Products Corporation in Exercise 6-15.
Required:
1. Using Exhibit 6A-1 as a guide, prepare a report showing the first-stage allocations of overhead costs to the activity cost pools.
2. Using Exhibit 6A-2 as a guide, compute the activity rates for the activity cost pools.
3. Using Exhibit 6A-3 as a guide, prepare a report showing the overhead costs for the order from Schenzhen Enterprises including customer support costs .
4. Using Exhibit 6-12 as a guide, prepare a report showing the customer margin for Schenzhen Enterprises.
5. Using 6A-5 as a guide, prepare an action analysis report showing the customer margin for Schenzhen Enterprises. Direct material should be coded as green costs, direct labor and wages and salaries as yellow costs, and other overhead costs as red costs.
6. What action, if any, do you recommend as a result of the above analyses? 
EXHIBIT 6A-1 First Stage Allocations to Activity Cost Pools A 1 F E Actudy Coal Post Product Customer | Oder Size Relations Customer Orders Other Total $ 135,000 $200.000 $100.000 $ 60,000 180,000 0 12 000 60,00D D 60,000 $ 0 0 0 25.000 $ 600.000 60.000 310.000 48 000 120.000 80 000 20 000 20.000 40.000 2 4 Production Department 5 Indirect factory wages 6 Factory equipment de precision 7 Factory utilities 8 Factory building lease 10 General Administratie Department 11 Administratie wages and salaries 12 Office equipment depreciation 13 Administrative building lease 16 Marketing Department: 16 Maricating wages and salaries 17 Selling expenses 19 Total cosi 20 BENF A-1 FhA2 60.000 15.000 0 120.000 12,500 0 160.000 22.600 60.000 110.000 60.000 60.000 0 55,000 5,000 20 000 0 D 150,000 35,000 25.000 10 000 230,000 50 000 $ $20,000 $ 252 000 $ 380,000 $367,500 $ 490 500 51810.000 Fit - PER F Art Order EXHIBIT 6A-2 Computation of the Activity Rates for the Action Analysis Report A B Acting Cost Podle Customer Product Customer Deep Size Relation Other 4 Total city 1.000 20.000 250 Not des product mane. applicable designs hours customers 7 Production Department Indirect factory wages 5 125.5 SOOS 55 200 9 Factory equipment apreciation 60 0 10 Factory utiles 30 3 0 11 Factory building lease 0 0 13 General Administrative Department 14 Administrative wapa dalies 60 50 2 4 15 Ofice equipment depreciation 15 0 D 50 16 Administrative building lease 0 0 18 Marketing Department 19 Marketing wages and salaries 50 G00 20 Seling expenses 10 D 140 22 Total conventional ABC Malysis 320 $ 690$ 19$ 1470 23 24 Achyres are not come uted for the other cost pool since these coata will not be listed father Pallet Adresa . $125,000 1,000 orders - S125 per order. Other entries in the table are computed similarly. F EXHIBIT 6A-3 Action Analysis Cost Matrices Orders Total D E 1 Action Analysis Cost Matrix for Standard Stanchions Activity Cost Pools Customer Product Customer 4 Design Order Size Relations 6 Total actity for stanchione 500 17.500 Not orders product machine applicable 1 designs hours 9 Production Department: 10 Indirect factory wage8 575.000, 5 05 87.500 11 Factory equipment depreciation 35.000 0 157.500 12 Factory utilities 0 0 52 500 13 Factory building lease 0 0 0 15 General Administratie Department: 16 Administrative wages and salaries 36.000 0 35.000 17 Ofice equipment depreciation 9.000 0 0 18 Administrative building lesse 0 0 0 20 Marketing Department 21 Marketing wages and salaries 33.000 0 0 22 Seling expenses 3.000 0 24 Total (conventional ABC analysis) 5 192.000 5 332 500 5 152 500 193 500 52 500 71000 9.000 0 33.000 3.000 524 500 KNExhibit SA-3A Exhibit GA-38 Exhibit 645 Activity rates From Exhibit 6A-2, the activity rate for indirect factory wages for the Customer Orders cost pool is $125 per order. $125 per order x 600 orders - $75,000 Other entries in the table are computed in a similar way. E F Total design 24 DDO D Action Analysis Cost Matrix for the Custom Compass Housings Adrwy Gos! Pools Customer Product Customer Orders Design Order Size Relations 6 Total activity for custom compass housinge 400 400 2.500 Not order produci machine applicable 7 hours 9 Production Department 10 Indirect factory wages 550,000 $ 200,000 5 12.500 11 Factory equipment depreciation D 22.500 12 Factory ulities 12.000 7.500 13 Factory building lease 0 0 0 15 General Administrative Department 16 Administratie wages and salaries 24,000 20.000 6.000 17 Office equipment depreciation 6,000 0 0 18 Administrative building lease 0 0 D 20 Marketing Department 21 Marketing wages and salaries 22,000 20 000 22 Selling axpanses 2.000 10 0 24 Total conventional ABC analysis) 5 128,000 5 252.000 5 47.500 25 HOME - Exhibit 6A-32. Exhibit Activitats $ 252 500 45.500 19.500 0 49.000 6.000 0 O 42 000 2000 $427.500 From Exhibit 6A-2, the activity rate for indirect factory wages for the Customer Orders cost pool is $125 per order. $125 per order x 400 orders - $50,000 Other entries in the table are computed in a similar way. EXHIBIT 64-4 Ease of Adjustment Codes Green: Costs that adjust automatically to changes in activity without management action. Direct materials Shipping costs Yellow: Costs that coud, in principle be adjusted to changes in acth- ity, but management action would be required Direct labor Indirect factory wages Factory utilities Administrative wages and salarles Office equipment depreciation Marketing wages and salaries Selling expenses Red: Costs that would be very difficult to adjust to changes in activity and management action would be required Factory equipment depreciation Factory building lease Administrative building lease EXHIBIT 6A-5 Action Analysis of Custom Compass Housings: Activity Based Costing System S 540,000 74.500 465,500 A Custom Compass Housings Sales (from Exhibit G-11) 4 Green costs 5 Direct materials (from Exhibit 6-11) $ 69,500 6 Shipping (from Exhibit 6-11) 5.000 7 Green margin 9 Yellow costs: 10 Direct labor (from Exhibit 6-11) 87,600 11 Indirect factory wages (from Exhibit GA-3) 262,500 12 Factory utilities from Exhibit 6A-3) 19.500 13 Administrative wages and salaries (from Exhibit 6A-3) 49.000 14 Office equipment depreciation (from Exhibit 6A-3) 6,000 15 Marketing wages and salaries (from Exhibit 6A-3) 42.000 16 Selling expenses (from Exhibit 6A-3) 2,000 17 Yellow margin 19 Red costs: 20 Factory equipment depreciation from Exhibit 6A-3) 45.500 21 Factory building lease (from Exhibit 6A-3) 0 22 Administrative building lease (from Exhibit GA-3) 0 23 Red margin Exhibit GAS Activity rates Stanchions Coll 468,500 (3.000) 46,500 $ 49.500)
