Question

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.

Answer 1