Advanced Products Corporation has supplied the following data from its activity-
ID: 2392773 • Letter: A
Question
Advanced Products Corporation has supplied the following data from its activity-based costing system: Overhead Costs Wages and salaries Other overhead costs Total overhead costs $600,000 500,000 $ 1,100,000 Activity Cost Pool Direct labor suppor Order processing Customer support Other Total Activity 10,000 DLHs 500 orders Activity Measure Number of direct labor-hours Number of customer orders Number of customers This is an o 100 customers taining activity Not applicable Distribution of Resource Consumption Across Activities Order Customer Direct Labor Support Processing Support Other Total Wages and salaries 30% 20% 20% 30% 100% Other overhead costs 20% 30% 30% 20% 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 Direct labor-hours Selling price Direct materials Direct labor $ $ $ 80 units 0.5 DLH per unit 295 per units 279 per unit 23 per DLH Required 1. Prepare a report showing the first-stage allocations of overhead costs to the activity cost pools. Distribution of Resource Consumption Across Activity Cost Pools Customer Direct Labor Order Other Totals Su Wages and salaries180,000 $ 120,000 S 120,000 S 180,000 600,000 Other overhead costs Total overhead costs 280,000S 270,000 S 270,000 S 280,000 S 1,100,000 100,000 150,000 150,000 100,000 500,000 2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Direct Order er Support Support Total activity Wages and salariesS Other overhead costs Total cost 10,000 DLHs 500 orders 100 customers 18.00$ 240.00$200.00 10.00 28.00$ 540.002,700.00 300.00 1,500.00Explanation / Answer
Answer 1. Distribution of resource Consumption Across Activity Cost Pools Direct Labor Support Order Processing Customer Suport Others Total Wages & Salaries 180,000.00 120,000.00 120,000.00 180,000.00 600,000.00 Other Overhead Costs 100,000.00 150,000.00 150,000.00 100,000.00 500,000.00 Total 280,000.00 270,000.00 270,000.00 280,000.00 1,100,000.00 Answer 2. Direct Labor Support Order Processing Customer Suport Total Activity 10,000 DLH 500 Orders 100 Customers Wages & Salaries 18.00 240.00 1,200.00 Other Overhead Costs 10.00 300.00 1,500.00 Answer 3. Direct Labor Support Order Processing Customer Suport Total Activity 40 DLH 1 Orders 1 Customers Wages & Salaries 720.00 240.00 1,200.00 2,160.00 Other Overhead Costs 400.00 300.00 1,500.00 2,200.00 Total Cost 1,120.00 540.00 2,700.00 4,360.00 Answer 4. Customer Margin - ABC Analysis Sales - 80 Units X $295 23,600.00 Costs: Direct Materials - 80 Units X $279 22,320.00 Direct Labor - 40 DLH X $23 920.00 Direct Labor Support Overhead 1,120.00 Order Processing Overhead 540.00 Customer Support Overhead 2,700.00 27,600.00 Customer Margin (4,000.00) Answer 5. Shenzhen Enterprises Sales - 80 Units X $295 23,600.00 Green Costs: Direct Materials - 80 Units X $279 22,320.00 22,320.00 Green Margin 1,280.00 Yellow Costs: Direct Labor - 40 DLH X $23 920.00 Wages & Salaries 2,160.00 3,080.00 Yellow Margin (1,800.00) Red Costs: Other Overhead Costs 2,200.00 2,200.00 Customer Margin (4,000.00)
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