QUESTION 1

Company X has budgeted costs in its various departments as follows for the coming year:

Training	$ 375,000.00
Custodial	$ 225,000.00
Maintenance	$ 100,000.00
Offset Printing	$ 380,000.00
Lithography	$ 524,000.00
Total Overhead	$1,604,000.00

The company allocates service department costs to other departments, in the order listed below:

	Number of Employees	Square Meters Occupied	Press Time Hours
Training	120	1,000	0
Custodial	200	2,000	0
Maintenance	400	4,000	0
Offset Printing	600	8,000	90,000
Lithography	400	24,000	30,000
Total	1,720	39,000	120,000

Offset Printing and Lithography are operating departments: the other departments all act in a service capacity. Training is allocated on the basis of number of employees; Custodial on the basis of square meters occupied; and Maintenance on the basis of press time hours.

Required:

1. Allocate service department costs to operating departments by the direct method
2. Allocate service department costs to operating departments by the step method.

QUESTION 2:

On-board Inc. is a company that manufactures specialty desks for computer gamers. The CEO of this company has decided to move to an Activity Based Costing system. The data from the new ABC system is listed below. Additionally, there are data from one of On Board's customers, Data Tech a software developer, as well.

Overhead Costs	Cost
Wages and Salaries	$350,000.00
Other Overhead Costs	$150,000.00
Total Overhead Costs	$500,000.00

Activity Cost Pool	Activity Measure	Total Activity for the Year
Assembly	Number of Direct Labour Hours	30,000
Delivery	Number of Customer Orders	500
Customer Support	Number of Customers	400
Other	costs not allocated to products or customers	N/A

	Distribution of Resource Consumption Across Activities
	Volume-Related	Order-Related	Customer Support	Other	Total
Wages and Salaries	30.00%	20.00%	40.00%	10.00%	100.00%
Other Overhead Costs	50.00%	10.00%	20.00%	20.00%	100.00%

Data concerning Data Tech's Order
Units Ordered	16	units
Direct Labour-Hours	4	DLHs per unit
Selling Price	$450.00	per desk
Direct Materials	$225.00	per desk
Direct Labour	$12.00	per hour

Using the above data, complete the following in regards to On Board:

1. Compute a report showing first-stage allocations of overhead costs to the activity cost pools.
2. Compute the activity rates for the activity cost pools.
3. Compute a report showing the overhead costs for the order fromData Tech.
4. Compute a report showing the product margin for the order and the customer margin forData Tech