Question
Question No. (2) Advanced Products Corporation has supplied the following data for its activity-based costing system: Overhead Costs : -Wages and salaries $ 300,000 -Other
Question No. (2)
Advanced Products Corporation has supplied the following data for its activity-based costing system:
Overhead Costs:
-Wages and salaries
$ 300,000
-Other overhead cost
100,000
Total overhead costs
$400,000
Activity cost pool
Activity Measure
Total Activity
for the Year
Supporting direct labor
Number of direct labor-hours
15,000 DLHs
Order processing
Number of customer orders
500 orders
Customer support
Number of customers
320 customers
other
This is an organization sustaining activity
Not applicable
Distribution of Resource Consumption Across Activities
Supporting Direct Labor
Order Processing
Customer Support
Other
Total
Wages and salaries
40%
30%
20%
10%
100%
Other overhead costs
30%
10%
20%
40%
100%
During the year, Advanced Products completed one order for a new customer, Big Market. This customer did not order any other products during the year. Data concerning that order follow:
Data concerning the Big Market Order
Units ordered
10 units
Direct Labor-hours
1.7 DLHs per unit
Selling price
$370 per unit
Direct materials
$190 per unit
Direct labor
$80 per unit
Required:
1.Prepare a report showing the first-stage allocations of overhead costs to the activity cost pools.
2.Compute the activity rates for the activity cost pools.
3.Prepare a report showing the overhead costs for the order from Big Market including customer support costs.
4.Prepare a report showing the customer margin for Big Market.
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