Question: Advanced Products Corporation has supplied the following data from its activity-based costing system:
Overhead Costs Wages and salaries $ 800,000
Other overhead costs 700,000
Total overhead costs $ 1,500,000
Activity Cost Pool Activity Measure Total Activity
Supporting direct labor Number of direct labor-hours 10,000 DLHs
Order processing Number of customer orders 500 orders
Customer support Number of customers 100 customers
Other This is an organization-sustaining activity Not applicable
Distribution of Resource Consumption Across Activities
Direct Labor Support Order Processing Customer Support Other Total
Wages and salaries 20 % 30 % 20 % 30 % 100 %
Other overhead costs 20 % 20 % 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 80 units
Direct labor-hours 0.5 DLH per unit
Selling price $ 300 per units
Direct materials $ 271 per unit
Direct labor $ 22 per DLH
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. (Round your answers to 2 decimal places.)
3. Prepare a report showing the overhead costs for the order from Shenzhen Enterprises including customer support costs. (Round your intermediate calculations to 2 decimal places.)
4. Prepare a report showing the customer margin for Shenzhen Enterprises.
5. Prepare an action analysis report showing the customer margin for Shenzhen Enterprises. Direct materials should be coded as a Green cost, direct labor and wages and salaries as Yellow costs, and other overhead costs as a Red cost.