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Problem 3 (Activity-Based Costing) Clover Corporation makes a single product - a fire-resistant commercial filing cabinet - that it sells to office furniture distributors. The company has a simple ABC system that it uses for internal decision making. The company has two o.erhead departments whose costs are listed below: Manufacturing overhead Selling and administrative overhead Total overhead costs P500,000 300,000 P800,000 The company's ABC system has the following activity cost pools and activity measures: Activity Cost Pool Assembling units......... Processing orders......... Supporting customers Other....... Activity Measure Number of units Number of orders Number of customers Not applicable Costs assigned to the "Other" activity cost pool have no activity measure; they consist of the costs of unused capacity and organization sustaining-costs - neither of which are assigned to orders, customers, or the product. Activity-Based Costing and Management 311 Clover Corporation distributes the costs of manufacturing overhead and of selling and administrative overhead to the activity cost pools based on employee interviews, the results of which are reported below: Distribution of Resource Consumption Across Activity Cost Pools Assembling Processing Supporting Units Manufacturing overhead Orders Customers Other Total 50% 35% 5% 10% 100% Selling and administrative overhead 10% Total activity 1.000 units 45% 250 orders 25% 100 customers 20% 100% Required: 1. Perform the first-stage allocation of overhead costs to the activity cost pools. 2. Compute activity rates for the activity cost pools. 3. Lucky Sale is one of Clover Corporation's customers. Last year, Lucky Sale ordered filing cabinets four different times. Lucky Sale ordered a total of 80 filing cabinets during the year. Construct a table showing the overhead costs attributable to Lucky Sale. 4. The selling price of a filing cabinet is P595. The cost of direct materials is P180 per filing cabinet, and direct labor is P50 per filing cabinet. What is the customer margin of Lucky Sale?