Silicon Optics has supplied the following data for use in its activity-based cos

Question

Silicon Optics has supplied the following data for use in its activity-based costing system During the year. Silicon Optics completed an order for a special optical switch for a new customer. Indus Telecom This customer did not order any other products during the year Data concerning that order follow Prepare an action analysis report showing the customer margin for Indus Telecom 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 (Negative margins should be indicated by a minus sign.)

Explanation / Answer

25000

INDUS TELECOM PARTICULARS Amount($) Amount($) Green Cost Direct Material [80 units*273$ pu] 21840 21840 Yellow Cost Wages & Salaries i) Direct Labour Support [80 units*.5 hrspu*$8 p hr] 320 ii) Order Processing 240 iii) Customer Support 800 Direct Labour [80 units*.5 hrspu*$ 21 p hr] 840 2200 Red Cost Other Overeads Cost i) Direct Labour Support [80 units*.5 hrspu*$6 p hr] 240 ii) Order Processing 120 iii) Customer Support 600 960 TOTALCOST

25000

WORKING TOTAL DLS OP CSS Other Wages 400000 80000 120000 80000 120000 Activity Measure 10000 Hrs 500 Order 100 Customer Cost per Activity 8 240 800 Other Overhead 300000 60000 60000 60000 120000 Activity Measure 10000 Hrs 500 Order 100 Customer Cost per Activity 6 120 600

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