$ : Advanced Products Corporation has supplied the following data from its activ
ID: 2460569 • Letter: #
Question
$
:
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
Supporting direct labor
Number of direct labor-hours
20,000
DLHs
Order processing
Number of customer orders
400
orders
Customer support
Number of customers
200
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
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, 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
10
units
Direct labor-hours
2
DLHs per unit
Selling price
$300
per unit
Direct materials
$180
per unit
Direct labor
$50
per unit
Other overhead costs
30
%
10
%
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
10
units
Direct labor-hours
2
DLHs per unit
Selling price
$300
per unit
Direct materials
$180
per unit
Direct labor
$50
per unit
Total overhead costs
$
400,000
Activity Cost Pool
Activity Measure
Total Activity
Supporting direct labor
Number of direct labor-hours
20,000
DLHs
Order processing
Number of customer orders
400
orders
Customer support
Number of customers
200
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
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, 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
10
units
Direct labor-hours
2
DLHs per unit
3
per unit
$
:
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
Supporting direct labor
Number of direct labor-hours
20,000
DLHs
Order processing
Number of customer orders
400
orders
Customer support
Number of customers
200
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
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, 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
10
units
Direct labor-hours
2
DLHs per unit
Selling price
$300
per unit
Direct materials
$180
per unit
Direct labor
$50
per unit
Other overhead costs
30
%
10
%
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
10
units
Direct labor-hours
2
DLHs per unit
Selling price
$300
per unit
Direct materials
$180
per unit
Direct labor
$50
per unit
Total overhead costs
$
400,000
Activity Cost Pool
Activity Measure
Total Activity
Supporting direct labor
Number of direct labor-hours
20,000
DLHs
Order processing
Number of customer orders
400
orders
Customer support
Number of customers
200
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
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, 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
10
units
Direct labor-hours
2
DLHs per unit
3
per unit
Explanation / Answer
Distribution of Resource Consumption Across Activities
Direct Labor Support
Order Processing
Customer Support
Other
Total
Wages and salaries:
%
40%
30%
20%
10%
100%
Amount (A)
$ 120,000
$ 90,000
$ 60,000
$ 30,000
$ 300,000
(300000*40%)
(300000*30%)
(300000*20%)
(300000*10%)
Other overhead costs:
%
30%
10%
20%
40%
100%
Amount (B)
$ 30,000
$ 10,000
$ 20,000
$ 40,000
$ 100,000
(100000*30%)
(100000*10%)
(100000*20%)
(100000*40%)
Total Cost =A+B =
$ 150,000
$ 100,000
$ 80,000
$ 70,000
$ 400,000
Calculation of Overhead Activity rates:
Activity Cost Pool
Activity Measure
Total Cost
Total Activity
Activity Rate
A
B
A/B
Supporting direct labor
Number of direct labor-hours
$ 150,000
20000
DLHs
$ 7.50
Order processing
Number of customer orders
$ 100,000
400
orders
$ 250.00
Customer support
Number of customers
$ 80,000
200
customers
$ 400.00
Other
This is an organization-sustaining activity
$ 70,000
Not applicable
Calculation of Cost for Order:
Direct Material Costs
(10 Units * $180)
$ 1,800
Direct Labor Costs
(10 Units * $50)
$ 500
Overhead Costs:
Supporting direct labor
(10 Units * 2 DLH * $7.50)
$ 150
Order processing
(1 order * $250)
$ 250
Customer support
(1 Customer * $400)
$ 400
Total Cost for the Job
$ 3,100
Distribution of Resource Consumption Across Activities
Direct Labor Support
Order Processing
Customer Support
Other
Total
Wages and salaries:
%
40%
30%
20%
10%
100%
Amount (A)
$ 120,000
$ 90,000
$ 60,000
$ 30,000
$ 300,000
(300000*40%)
(300000*30%)
(300000*20%)
(300000*10%)
Other overhead costs:
%
30%
10%
20%
40%
100%
Amount (B)
$ 30,000
$ 10,000
$ 20,000
$ 40,000
$ 100,000
(100000*30%)
(100000*10%)
(100000*20%)
(100000*40%)
Total Cost =A+B =
$ 150,000
$ 100,000
$ 80,000
$ 70,000
$ 400,000
Calculation of Overhead Activity rates:
Activity Cost Pool
Activity Measure
Total Cost
Total Activity
Activity Rate
A
B
A/B
Supporting direct labor
Number of direct labor-hours
$ 150,000
20000
DLHs
$ 7.50
Order processing
Number of customer orders
$ 100,000
400
orders
$ 250.00
Customer support
Number of customers
$ 80,000
200
customers
$ 400.00
Other
This is an organization-sustaining activity
$ 70,000
Not applicable
Calculation of Cost for Order:
Direct Material Costs
(10 Units * $180)
$ 1,800
Direct Labor Costs
(10 Units * $50)
$ 500
Overhead Costs:
Supporting direct labor
(10 Units * 2 DLH * $7.50)
$ 150
Order processing
(1 order * $250)
$ 250
Customer support
(1 Customer * $400)
$ 400
Total Cost for the Job
$ 3,100
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