Problem $4-20(45$ minutes$)$

$1.$ a$.$ The unit product cost under absorption costing is:

Direct materials $$20$

Direct labor

Variable manufacturing overhead

Fixed manufacturing overhead

$($$$100,000-$: $10,000$ units$)10$

Absorption costing unit product cost $$\_\_\_$

b$.$ The absorption costing income statement is:

Sales $(8,000$ units $\backslash$times $$75$ per unit$)$ $$600,000$

Cost of goods sold $(8,000$ units $\backslash$times $$40$ per unit$)\_\_\_\_\_\_\_$

Gross margin $280,000$

Selling and administrative expenses

$[$$$200,000+(8,000$ units $\backslash$times $$6$ per unit$)]\_\_\_\_\_\_$

Net operating income $$\_\_\_\_\_\_\_$

$2.$ a$.$ The unit product cost under variable costing is:

Direct materials $$20$

Direct labor

Variable manufacturing overhead $\_$

Variable costing unit product cost $\_\_$

b$.$ The variable costing income statement is:

Sales $(8,000$ units $\backslash$times $$75$ per unit$)$ $$600,000$

Variable expenses:

Variable cost of goods sold

$(8,000$ units $\backslash$times $$30$ per unit$)$ $

Variable selling expenses

$(8,000$ units $\backslash$times $$6$ per unit$)\_\_\_\_\_\_\_\_\_\_$

Contribution margin

Fixed expenses:

Fixed manufacturing overhead $100,000$

Fixed selling and administrative expenses $\_\_\_\_\_\_\_\_\_\_\_\_\_$

Net operating income $ $\_\_\_\_\_\_$

Problem $4-20($continued$)$

$3.$

Exercise $5-15(30$ minutes$)$

$1.$ First$-$stage allocations of overhead costs to the activity cost pools:

Distribution of Resource Consumption

Across Activity Cost Pools

Supporting Direct Labor Order Processing Customer Support Other Totals

Wages and salaries

$40\%30\%20\%10\%100\%$

Other overhead costs $30\%10\%20\%40\%100\%$

Direct Labor Support Order Processing Customer Support Other Totals

Wages and salaries $

$ $90,000$ $ $ $30,000$ $$300,000$

Other overhead costs $30,000\_\_\_\_20,00040,000\_\_\_\_\_$

Total cost $$\_\_\_\_\_\_\_\_$ $$100,000$ $ $\_\_\_\_\_$ $ $\_\_\_\_\_\_$ $$\_\_\_\_\_$

Example: $40\%$ of $$\_\_\_\_$ is $$\_\_\_\_\_\_.$

$2.$ Computation of activity rates:

Activity Cost Pools $($a$)$

Total Cost $($b$)$

Total Activity $($a$)-$: $($b$)$

Activity Rate

Supporting direct

labor

$$150,000$

$20,000$

DLHs

$$7\mathrm{.}50$

per DLH

Order processing $ $\_\_\_$ orders $ per order

Customer support $ $\_\_\_$ customers $ per customer

$3.$ Computation of the overhead costs for the Shenzhen Enterprises order:

Activity Cost Pool $($a$)$

Activity Rate $($b$)$

Activity $($a$)\backslash$times $($b$)$

ABC Cost

Supporting direct labor

$$7\mathrm{.}50$

per DLH $20$

DLHs$*$ $$150$

Order processing $$\_\_\_$ per order $1$ order

Customer support $$\_\_\_$ per customer $1$ customer $\_\_\_\_$

Total $$\_\_\_\_$

$*2$ DLHs per unit $\backslash$times $\_\_$ units $=\_\_$ DLHs$.$

$4.$ The customer margin for Shenzhen Enterprises is computed as follows:

Customer Margin$$ABC Analysis

Sales $(10$ units $\backslash$times $$300$ per unit$)$ $$3,000$

Costs:

Direct materials $($$$180$ per unit $\backslash$times $10$ units$)$ $$1,800$

Direct labor $($$$50$ per unit $\backslash$times $10$ units$)500$

Support direct labor overhead $($see part $3$ above$)$

Order processing overhead $($see part $3$ above$)$

Customer support overhead $($see part $3$ above$)\_\_\_\_\_\_\_$

Customer margin $ $(\_\_\_)$