Advanced Products Corporation has supplied the following data from its activity-based costing system: ...
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Accounting
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 for the Year
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
Supporting Direct Labor
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
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. Calculate the total overhead costs for the order from Shenzhen Enterprises including customer support costs.
4. Calculate the customer margin for Shenzhen Enterprises.
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