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$ : Advanced Products Corporation has supplied the following data from its activ

ID: 2460569 • Letter: #

Question

$

  

:


  

  

  

  

  

  

  


  

      

     

  

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


   Overhead Costs

  Wages and salaries

$

300,000

  Other overhead costs

100,000

  Total overhead costs

$

400,000

  Activity Cost Pool

Activity Measure

Total Activity

  Supporting direct labor

Number of direct labor-hours

20,000

DLHs

  Order processing

Number of customer orders

400

orders

  Customer support

Number of customers

200

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

40

%

30

%

20

%

10

%

100

%

  Other overhead costs

30

%

10

%

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

10

units

  Direct labor-hours

2

DLHs per unit

  Selling price

$300

per unit

  Direct materials

$180

per unit

  Direct labor

$50

per unit

  Other overhead costs

30

%

10

%

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

10

units

  Direct labor-hours

2

DLHs per unit

  Selling price

$300

per unit

  Direct materials

$180

per unit

  Direct labor

$50

per unit

  Total overhead costs

$

400,000

  Activity Cost Pool

Activity Measure

Total Activity

  Supporting direct labor

Number of direct labor-hours

20,000

DLHs

  Order processing

Number of customer orders

400

orders

  Customer support

Number of customers

200

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

40

%

30

%

20

%

10

%

100

%

  Other overhead costs

30

%

10

%

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

10

units

  Direct labor-hours

2

DLHs per unit

3

per unit

  

  

$

  

:


  

  

  

  

  

  

  


  

      

     

  

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


   Overhead Costs

  Wages and salaries

$

300,000

  Other overhead costs

100,000

  Total overhead costs

$

400,000

  Activity Cost Pool

Activity Measure

Total Activity

  Supporting direct labor

Number of direct labor-hours

20,000

DLHs

  Order processing

Number of customer orders

400

orders

  Customer support

Number of customers

200

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

40

%

30

%

20

%

10

%

100

%

  Other overhead costs

30

%

10

%

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

10

units

  Direct labor-hours

2

DLHs per unit

  Selling price

$300

per unit

  Direct materials

$180

per unit

  Direct labor

$50

per unit

  Other overhead costs

30

%

10

%

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

10

units

  Direct labor-hours

2

DLHs per unit

  Selling price

$300

per unit

  Direct materials

$180

per unit

  Direct labor

$50

per unit

  Total overhead costs

$

400,000

  Activity Cost Pool

Activity Measure

Total Activity

  Supporting direct labor

Number of direct labor-hours

20,000

DLHs

  Order processing

Number of customer orders

400

orders

  Customer support

Number of customers

200

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

40

%

30

%

20

%

10

%

100

%

  Other overhead costs

30

%

10

%

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

10

units

  Direct labor-hours

2

DLHs per unit

3

per unit

  

  

Explanation / Answer

Distribution of Resource Consumption Across Activities

  

Direct Labor Support

Order Processing

Customer Support

      Other

     Total

Wages and salaries:

%

40%

30%

20%

10%

100%

Amount (A)

$                                               120,000

$              90,000

$                60,000

$         30,000

$      300,000

(300000*40%)

(300000*30%)

(300000*20%)

(300000*10%)

Other overhead costs:

%

30%

10%

20%

40%

100%

Amount (B)

$                                                30,000

$              10,000

$                20,000

$         40,000

$      100,000

(100000*30%)

(100000*10%)

(100000*20%)

(100000*40%)

Total Cost =A+B =

$                                               150,000

$            100,000

$                80,000

$         70,000

$      400,000

Calculation of Overhead Activity rates:

  Activity Cost Pool

Activity Measure

Total Cost

Total Activity

Activity Rate

A

B

A/B

  Supporting direct labor

Number of direct labor-hours

$            150,000

20000

DLHs

$           7.50

  Order processing

Number of customer orders

$            100,000

400

orders

$       250.00

  Customer support

Number of customers

$              80,000

200

customers

$       400.00

  Other

This is an organization-sustaining activity

$              70,000

Not applicable

Calculation of Cost for Order:

Direct Material Costs

(10 Units * $180)

$                1,800

Direct Labor Costs

(10 Units * $50)

$                   500

Overhead Costs:

  Supporting direct labor

(10 Units * 2 DLH * $7.50)

$                   150

  Order processing

(1 order * $250)

$                   250

  Customer support

(1 Customer * $400)

$                   400

Total Cost for the Job

$                3,100

Distribution of Resource Consumption Across Activities

  

Direct Labor Support

Order Processing

Customer Support

      Other

     Total

Wages and salaries:

%

40%

30%

20%

10%

100%

Amount (A)

$                                               120,000

$              90,000

$                60,000

$         30,000

$      300,000

(300000*40%)

(300000*30%)

(300000*20%)

(300000*10%)

Other overhead costs:

%

30%

10%

20%

40%

100%

Amount (B)

$                                                30,000

$              10,000

$                20,000

$         40,000

$      100,000

(100000*30%)

(100000*10%)

(100000*20%)

(100000*40%)

Total Cost =A+B =

$                                               150,000

$            100,000

$                80,000

$         70,000

$      400,000

Calculation of Overhead Activity rates:

  Activity Cost Pool

Activity Measure

Total Cost

Total Activity

Activity Rate

A

B

A/B

  Supporting direct labor

Number of direct labor-hours

$            150,000

20000

DLHs

$           7.50

  Order processing

Number of customer orders

$            100,000

400

orders

$       250.00

  Customer support

Number of customers

$              80,000

200

customers

$       400.00

  Other

This is an organization-sustaining activity

$              70,000

Not applicable

Calculation of Cost for Order:

Direct Material Costs

(10 Units * $180)

$                1,800

Direct Labor Costs

(10 Units * $50)

$                   500

Overhead Costs:

  Supporting direct labor

(10 Units * 2 DLH * $7.50)

$                   150

  Order processing

(1 order * $250)

$                   250

  Customer support

(1 Customer * $400)

$                   400

Total Cost for the Job

$                3,100