Reference no: EM131922122

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.