Homework: Activity-based costing Advanced Products Corporation has supplied the following data from its ABS costing system: Overead costs Wages and salaries $300,000 Selling and administrative overhead $100,000 During the year, Advanced Products completed one order from one new customer, Foam Inc, Here is the data concerning the order from this new customer, Foam Inc. Units Ordered 10 unites Direct Labor hours 2 DLHs per unit Selling price $300 per unit Direct materials $180 per unit Direct labor $50 per unit Step 1: define activities, activity cost pools, and activity measures Total activity supporting Aabor order processing customer support others wagos and salaries 40% 30% 20% 10% Selling and administrative overhead 30% 10% 20% 40% 20,000 400 200 not applicable DLHS units customers Step 2: assign overhead costs to activity cost pools (this is also called first-stage allocation) Perform the first stage allocations per DLH supporting labor order processing customer support others Total wages and salaries Selling and administrative overhead Total cost Step 3: calculate activity rates Compute the activity rates Activity Cost Pools Total Cost Total Activity Activity Rate supporting labor DLHS order processing units per unit customer support customers per customer Step 4. assign overhead costs to cost objects (this is also called second stage allocation) Compute the overhead cost attributable to the Foram Inc. Activity Cost Pools Activity Rate Activity ABC Cost supporting direct labor DLHs order processing per unit units customer support per customer customer Step 5: prepare management reports Determine the customer margin for the Foam Inc. orders under Activity-Based Costing Sales Costs Direct materials Direct labor Supporting labot-related overhead Order processing overhead Customer support overhead Customer margin per DLH Homework: Activity-based costing Advanced Products Corporation has supplied the following data from its ABS costing system: Overead costs Wages and salaries $300,000 Selling and administrative overhead $100,000 During the year, Advanced Products completed one order from one new customer, Foam Inc. Here is the data concerning the order from this new customer, Foam Inc. Units Ordered 10 unites Direct Labor hours 2 DLHS per unit Selling price $300 per unit Direct materials $180 per unit Direct labor $50 per unit Step 1: define activities, activity cost pools, and activity measures wages and salaries Selling and administrative overhead Total activity supporting labor order processing customer support 40% 30% 20% 30% 10% 20% 20,000 400 200 DLHs units customers others 10% 40% not applicable Overead 30% 10% 20% 40% Total activity 20,000 400 200 not applicable DLHS units customers Step 2: assign overhead costs to activity cost pools (this is also called first-stage allocation) Perform the first stage allocations per DLH supporting labor order processing customer support others Total wages and salaries Selling and administrative overhead Total cost Step 3: calculate activity rates Compute the activity rates Activity Cost Pools Total Cost Total Activity Activity Rate supporting labor DLHS order processing units per unit customer support customers per customer Step 4: assign overhead costs to cost objects (this is also called second stage allocation) Compute the overhead cost attributable to the Foram Inc. Activity Cost Pools Activity Rate Activity ABC Cost supporting direct labor per DLH DLHS order processing per unit units customer support per customer customer Step 5: prepare management reports Determine the customer margin for the Foam Inc. orders under Activity-Based Costing Sales Costs: Direct materials Direct labor Supporting labor-related overhead Order processing overhead Customer support overhead Customer margin
