Comprehensive Activity-Based Costing Exercise
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
|
# of direct-labor hours
|
20,000 DLHs
|
|
Order processing
|
# of customer orders
|
400 orders
|
|
Customer support
|
# 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, Shenzen Enterprises. This customer did not order any other products during the year. Data concerning that order follow:
|
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: Use the template provided, save it to your desktop and then upload and submit your assignment.
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. Prepare a report showing the overhead costs for the order from Shenzhen Enterprises including customer support costs.
4. Prepare a report showing the customer margin for Shenzhen Enterprises.
1. First-stage allocations of overhead costs to the activity cost pools:
2. Computation of activity rates:
3. Computation of the overhead costs for the Shenzhen Enterprises order:
4. The customer margin for Shenzhen Enterprises is computed as follows: