Question
OfficeMart has found an error in its data. The percentage of selling and administrative overhead attributable to processing orders should be changed to 30% from
OfficeMart has found an error in its data. The percentage of selling and administrative overhead attributable to processing orders should be changed to 30% from 45% and the percentage attributable to supporting customers should be changed to 40% from 25%.
Chapter 5: Applying Excel | ||||
Data | ||||
Manufacturing overhead | $500,000 | |||
Selling and administrative overhead | $300,000 | |||
Assembling Units | Processing Orders | Supporting Customers | Other | |
Manufacturing overhead | 50% | 35% | 5% | 10% |
Selling and administrative overhead | 10% | 30% | 40% | 20% |
Total activity | 1,000 | 250 | 100 | |
units | orders | customers | ||
OfficeMart orders: | ||||
Customers | 1 | customer | ||
Orders | 8 | orders | ||
Number of filing cabinets ordered in total | 80 | units | ||
Selling price | $595 | |||
Direct materials | $180 | |||
Direct labor | $50 |
(a) Based on new number of orders in Requirement 2, what is the customer margin under activity-based costing when the data are corrected? (Enter a loss as a negative amount.)
(b) Based on new number of orders in Requirement 2, what is the product margin under the traditional costing system when the data are corrected? (Enter a loss as a negative amount.)
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