Q5) Kandy corporation makes a single product-a fire-resistant commercial filling 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 overhead departments whose costs are listed on the following page:

Manufacturing overhead $800,000

Selling and administrative overhead $500,000

The company's ABC system has the following activity cost pools and activity measures:

Activity cost pool activity measure

Processing orders Number of orders

Assembling units Number of units

Supporting customers Number of customers

Kandy 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:

Assembling Processing Supporting

Manufacturing overhead 50% 35% 15%

Selling and administrative 30% 50% 20%

Total activity 1000 250 100

Units orders customers

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) OfficeMart is one of Kandy corporation's customers. Last year, OfficeMart ordered filling cabinets four different times. OfficeMart ordered a total units of 80 filing cabinets selling the year. Construct a table showing the overhead costs attributable to OfficeMart.