Required information (The following information applies to the questions displayed below.) Miami Valley Architects Inc. provides a wide range of engineering and architectural consulting services through its three branch offices in Columbus, Cincinnati, and Dayton, Ohio. The company allocates resources and bonuses to the three branches based on the net income of the period. The results of the firm's performance for the most recent year follows ($ in thousands): Columbus Cincinnati $ 1,500 $ 1.419 Dayton $ 1,067 Total $ 3,986 Sales Less: Direct labor Direct materials Overhead Net income 382 281 710 $ 127 317 421 589 317 185 589 1,016 887 1,888 $ 195 $ 92 $ (24) Miami Valley accumulates overhead items in one overhead pool and allocates it to the branches based on direct labor dollars. For this year, the predetermined overhead rate was $1.859 for every direct labor dollar incurred by an office. The overhead pool includes rent, depreciation, and taxes, regardless of which office incurred the expense. Some branch managers complain that the overhead allocation method forces them to absorb a portion of the overhead incurred by the other offices. Management is concerned with the recent operating results. During a review of overhead expenses, management noticed that many overhead items were clearly not correlated to the movement in direct labor dollars as previously assumed. Management decided that applying overhead based on activity-based costing and direct tracing wherever possible should provide a more accurate picture of the profitability of each branch. An analysis of the overhead revealed that the following dollars for rent, utilities, depreciation, and taxes could be traced directly to the office that incurred the overhead ($ in thousands): Columbus Cincinnati Dayton Total Direct overhead $ 180 $ 270 $ 177 $ 627 Activity pools and their corresponding cost drivers were determined from the accounting records and staff surveys as follows: osting General administration $ 409,000 48,000 Accounts payable/receiving 139,000 Accounts receivable 47,000 Payroll/Mail sort and delivery 30,000 Personnel recruiting 38,000 Employee insurance processing 14,000 Proposals 139,000 Sales meetings/Sales aids 202,000 Shipping 24,000 Ordering 48,000 Duplicating costs 46,000 Blueprinting 77,000 $ 1,261,000 Cost Driver Direct labor cost Timesheet entrien Vendor invoices client invoices Employees New hires Insurance claims filed Proposals tracted sales Projects shipped Purchase orders Copies duplicated Blueprints Amount of Cost Driver Use by Location Columbus Cincinnati Dayton $ 382,413 $ 317,086 $ 317,188 6,000 3,800 3,500 1,020 850 400 588 96 23 26 18 8 4 7 230 260 180 200 250 60 1,824,439 1,399,617 571,208 99 124 30 135 110 80 162,500 146,250 65,000 39,000 31,200 16,000 Required: 1. What overhead costs should be assigned to each branch based on ABC concepts? 2. What is the contribution of each branch before subtracting the results obtained in requirement 1? 3. What is the profitability of each branch office using ABC? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What overhead costs should be assigned to each branch based on ABC concepts? (Do not round intermediate calculations. Enter your answers in thousands of dollars, rounded to two decimal places.) Total 0.00 0.00 0.00 0.00 0.00 General administration Project costing Accounts payable/receiving Accounts receivable Payroll/Mail sort and delivery Personnel recruiting Employee insurance processing Proposals Sales meetings/Sales aids Shipping Ordering Duplicating costs Blueprinting Total Activity-based Overhead Allocation (in thousands) Cost Driver Columbus Cincinnati Dayton Direct labor cost $ Timesheet entries Vendor Invoices Client invoices Employees New hires Le Insurance claims filed Propeole Proposals Contracted sales Projects shipped Purchase orders Copies duplicated Blueprints S 0.00 $ 0.00 $ 0.00 $ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Required Required 2 >
