OfficeMart has found an error in its data. The percentage of selling and administrative overhead attributable to processing orders should be changed to 25% from 45% and the percentage attributable to supporting customers should be changed to 45% from 25%.

	A	B	C	D	E	F
1	Chapter 7: Applying Excel
2
3	Data
4	Manufacturing overhead	$500,000
5	Selling and administrative overhead	$300,000
6
7		Assembling Units	Processing Orders	Supporting Customers	Other
8	Manufacturing overhead	50%	35%	5%	10%
9	Selling and administrative overhead	10%	25%	45%	20%
10	Total activity	1,000	250	100
11		units	orders	customers
12
13	OfficeMart orders:
14	Customers	1	customer
15	Orders	16	orders
16	Number of filing cabinets ordered in total	80	units
17	Selling price	$595
18	Direct materials	$180
19	Direct labor	$50
20

(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.