Download the Applying Excel form and enter formulas in all cells that contain qu

Question

Download the Applying Excel form and enter formulas in all cells that contain question marks. For example, in cell B26 enter the formula “= B4*B8”. Note that the worksheet contains a section at the bottom titled “Determine the Product Margin Under a Traditional Cost System” that is not in the Review Problem. In this section, it is assumed that the traditional costing system allocates manufacturing overhead on the basis of the number of units produced. When completed, that part of the worksheet should contain the following results: 52 Determine the product margin for the OfficeMart orders under a traditional cost system 53 Manufacturing overhead $ 500,000 54 Total activity 1,000 units 55 Manufacturing overhead per unit $ 500 per unit 56 57 Sales $ 47,600 58 Costs: 59 Direct materials $ 14,400 60 Direct labor 4,000 61 Manufacturing overhead 40,000 58,400 62 Traditional costing product margin $ (10,800) 63 After entering formulas in all of the cells that contained question marks, verify that the dollar amounts match the numbers in the Review Problem. Check your worksheet by doubling the units ordered in cell B16 to 160. The customer margin under activity-based costing should now be $7,640 and the traditional costing product margin should be $(21,600). If you do not get these results, find the errors in your worksheet and correct them. Save your completed Applying Excel form to your computer and then upload it here by clicking “Browse.” Next, click “Save.” You will use this worksheet to answer the questions in Part 2 2. Assume that OfficeMart places orders more frequently, but everything else remains the same. On your worksheet increase the number of orders from 4 to 21. (Prior to completing this requirement, change all worksheet figures back to their original amounts.) (a) What is the customer margin under activity-based costing when the number of orders increases to 21? (Enter a loss as a negative amount.) _ (b) What is the product margin under the traditional costing system when the number of orders increases to 21? (Enter a loss as a negative amount.) (c) Which of the following statements are true? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.) If a customer orders more frequently, but orders the same total number of units over the course of a year, the customer margin under activity based costing will decrease. If a customer orders more frequently, but orders the same total number of units over the course of a year, the product margin under a traditional costing system will decrease. If a customer orders more frequently, but orders the same total number of units over the course of a year, the customer margin under activity based costing will be unaffected. If a customer orders more frequently, but orders the same total number of units over the course of a year, the product margin under a traditional costing system will be unaffected. 3. OfficeMart has found an error in its data. The percentage of selling and administrative overhead attributable to processing orders should be changed to 35% from 45% and the percentage attributable to supporting customers should be changed to 35% from 25%. (a) Based on new number of orders in Requirement 2, what is the customer margin under activity-based costing when the data are corrected? (Enter a loss as a negative amount.) (b) Based on new number of orders in Requirement 2, what is the product margin under the traditional costing system when the data are corrected? (Enter a loss as a negative amount.) (c) Which of the following statements are true about what happens when the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.) Costs are shifted from the processing orders cost pool to the supporting customers cost pool. Costs will be shifted from customer who order more frequently to those who order less frequently. The customer margins of those who order more frequently will increase relative to the customer margins of those who order less frequently.

Explanation / Answer

What is the product margin under the traditional costing system when the number of orders increases to 21? (Enter a loss as a negative amount.) (c) Which of the following statements are true? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.) If a customer orders more frequently, but orders the same total number of units over the course of a year, the customer margin under activity based costing will decrease. If a customer orders more frequently, but orders the same total number of units over the course of a year, the product margin under a traditional costing system will decrease. If a customer orders more frequently, but orders the same total number of units over the course of a year, the customer margin under activity based costing will be unaffected. If a customer orders more frequently, but orders the same total number of units over the course of a year, the product margin

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