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Promokare Inc. has supplied the following data for use in its ABC system: Overhead Costs Wages and salaries $393,000 Rent expense $102,000 Other overhead costs
Promokare Inc. has supplied the following data for use in its ABC system: Overhead Costs Wages and salaries $393,000 Rent expense $102,000 Other overhead costs $212,000 Total overhead costs $707,000 Activity Cost Pool Activity Measure Total Activity Direct labour support Number of direct labour-hours (DLH) 9,750 DLHS Order processing Number of orders 1,500 orders Customer support Number of customers 1,000 customers Other N/A Distribution of Resource Consumption Across Activity Cost Pools Other Total Direct Order Customer Labour Processing Support Support 45% 35% 10% 0% 0% 0% 10% 100% Wages and salaries Rent expense Other overhead costs 100% 100% 10% 15% 25% 50% 100% During the year, Promokare Inc. completed an order for a new customer, Lomat Inc.. This customer did not order any other products during the year. Data concerning their order follows. Selling price $320 per unit Units ordered 245 units Direct materials $150 per unit Direct labour-hours 1.2 DLH per unit Direct labour rates $15 per DLH 1. What is the total overhead cost related to order processing? (1 mark) 2. What is the total overhead cost that will be allocated to products? (2 marks) 3. What is the total overhead cost that will be allocated to customers? (2 marks) 4. What is the activity rate for direct labour support (rounded to two decimals)? (1 mark) 5. What is the activity rate for order processing (rounded to two decimals)? (1 mark) 6. What is the activity rate for customer support (rounded to two decimals)? (1 mark) 7. What is the sales revenue from Lomat Inc.? (1 mark) 8. What are the total direct costs traced to Lomat Inc.? (2 marks) 9. What amount of overhead will be allocated to Lomat Inc. (rounded to nearest dollar)? (2 marks) 10. What is Lomat Inc.'s customer margin (rounded to nearest dollar)? (2 marks)
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