Question
Ferris Corporation makes fire resistant commercial filing cabinets that it sells to office distributors. The company has a simple ABC system that it uses for
Ferris Corporation makes fire resistant commercial filing cabinets that it sells to office distributors. The company has a simple ABC system that it uses for internal decision making. The company has two overhead departments whose costs are as follows:
Manufacturing overhead: $500,000
Selling & distribution overhead: $300,000
Total :$800,000
The Companys ABC system has the following activity cost pools and activity measures:
Activity Cost Pools | Activity Cost Measures |
Assembling units | Number of units |
Processing orders | Number of orders |
Supporting Customers | Number of Customers |
Other | Not applicable |
Costs assigned to the Other activity cost pool have no activity measure; they consist of costs of unused capacity and organization-sustaining costs neither of which are assigned to orders, customers, or the product.
Ferris Corporation distributes the costs of manufacturing overhead and selling and administration overhead to the activity cost pools based on employees interviews, the results of which are reported below:
Distribution of Resource Consumption across Activity Costs Pools
| Assembling Units | Processing Orders | Supporting Customers | Other | Total |
Manufacturing Overhead | 50% | 35% | 5% | 10% | 100% |
Selling & Administrative overhead | 10% | 45% | 25% | 20% | 100% |
Total Activity | 1000 units | 250 orders | 100 Customers |
|
|
You have to do the following:
- Perform the first stage allocation of overhead costs to the activity cost pools
- Compute the activity rates for the activity cost pools based on the total Cost based on the total Activity drivers.
- Office Mart is one of Ferris Corporations customers. Last year, Office Mart ordered filing cabinets four different times. Office Mart ordered a total of 80 filin
Ferris Corporation makes fire resistant commercial filing cabinets that it sells to office distributors. The company has a simple ABC system that it uses for internal decision making. The company has two overhead departments whose costs are as follows:
Manufacturing overhead: $500,000
Selling & distribution overhead: $300,000
Total :$800,000
The Companys ABC system has the following activity cost pools and activity measures:
Activity Cost Pools
Activity Cost Measures
Assembling units
Number of units
Processing orders
Number of orders
Supporting Customers
Number of Customers
Other
Not applicable
Costs assigned to the Other activity cost pool have no activity measure; they consist of costs of unused capacity and organization-sustaining costs neither of which are assigned to orders, customers, or the product.
Ferris Corporation distributes the costs of manufacturing overhead and selling and administration overhead to the activity cost pools based on employees interviews, the results of which are reported below:
Distribution of Resource Consumption across Activity Costs Pools
Assembling Units
Processing Orders
Supporting Customers
Other
Total
Manufacturing Overhead
50%
35%
5%
10%
100%
Selling & Administrative overhead
10%
45%
25%
20%
100%
Total Activity
1000 units
250 orders
100 Customers
You have to do the following:
- Perform the first stage allocation of overhead costs to the activity cost pools
- Compute the activity rates for the activity cost pools based on the total Cost based on the total Activity drivers.
- Office Mart is one of Ferris Corporations customers. Last year, Office Mart ordered filing cabinets four different times. Office Mart ordered a total of 80 filing cabinets during the year. Construct a table showing the overhead costs attributable to Office Mart
- The selling price of filing cabinet is $595. The cost of direct materials is $180 per filing cabinet, and direct labor is $50 per filing cabinet. What would be the Customer margin (both in value and % on sales) of Office Mart?
- g cabinets during the year. Construct a table showing the overhead costs attributable to Office Mart
- The selling price of filing cabinet is $595. The cost of direct materials is $180 per filing cabinet, and direct labor is $50 per filing cabinet. What would be the Customer margin (both in value and % on sales) of Office Mart?
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