Advanced Products Corporation has supplied the following data from its activity-

Question

Advanced Products Corporation has supplied the following data from its activity-based costing system Overhead Costs Wages and salaries Other overhead costs $300,000 100,000 Total overhead costs $400,000 Total Activity for the Activity Cost Pool Supporting direct labor Order processing Customer support Other Activity Measure Number of direct labor-hours Number of customer orders Number of customers This is an organization- Year 20,000 DLHs 400 orders 200 customers Not applicable sustaining activity Distribution of Resource Consumption Across Activities Supporting Order Customer Support 20% 20% Direct Labor Processing Wages and salaries Other overhead costs 40% 30% 30% 10% Other 10% 40% Total 100% 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 10 units 2 DLHs per unit 300 per unit $ 180 per unit $ 50 per unit 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 3. Calculatethe total overhead costs for the order from Shenzhen Enterprises including customer support costs 4. Calculate the customer margin for Shenzhen Enterprises.

Explanation / Answer

Solution 1:

Solution 2:

Solution 3:

Solution 4:

First stage allocation of cost to activity cost pools Particulars Total Cost Supporting direct labor Order Processing Customer Support Others % Amount % Amount % Amount % Amount Wages & Salaries $300,000.00 40% $120,000.00 30% $90,000.00 20% $60,000.00 10% $30,000.00 Other Overhead Cost $100,000.00 30% $30,000.00 10% $10,000.00 20% $20,000.00 40% $40,000.00 Total $400,000.00 $150,000.00 $100,000.00 $80,000.00 $70,000.00

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