Question

Advanced Products Corporation has supplied the following data from its activity-based costing system: Overhead Costs Wages...

Advanced Products Corporation has supplied the following data from its activity-based costing system:

Overhead Costs
Wages and salaries $ 900,000
Other overhead costs 800,000
Total overhead costs $ 1,700,000

  

  

Activity Cost Pool Activity Measure Total Activity
Direct labor support Number of direct labor-hours 10,000 DLHs
Order processing Number of customer orders 500 orders
Customer support Number of customers 100 customers
Other This is an organization-sustaining activity Not applicable
Distribution of Resource Consumption Across Activities
Direct Labor Support Order Processing Customer Support Other Total
Wages and salaries 20 % 30 % 20 % 30 % 100 %
Other overhead costs 20 % 20 % 20 % 40 % 100 %

  

During the year, Advanced Products completed one order for a new customer, Shenzhen Enterprises. This customer did not order any other products during the year. Data concerning that order follow:

  

Data Concerning the Shenzhen Enterprises Order
  Units ordered 70 units
  Direct labor-hours 0.4 DLH per unit
  Selling price $ 295 per units
  Direct materials $ 273 per unit
  Direct labor $ 24 per DLH

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. (Round your answers to 2 decimal places.)

3. Prepare a report showing the overhead costs for the order from Shenzhen Enterprises including customer support costs. (Round your intermediate calculations to 2 decimal places.)

4. Prepare a report showing the customer margin for Shenzhen Enterprises.

5. Prepare an action analysis report showing the customer margin for Shenzhen Enterprises. Direct materials should be coded as a Green cost, direct labor and wages and salaries as Yellow costs, and other overhead costs as a Red cost.

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