Cancico Communications has supplied the following data for use in its activity-b
ID: 2466169 • Letter: C
Question
Cancico Communications has supplied the following data for use in its activity-based costing system:
Overhead Costs
Wages and Salaries
262,500
Other overhead costs
150,000
Total overhead costs
412,500
Activity Cost Pool
Activity Measure
Total Activity
Direct labour support
Number of direct labour-hours
7,500 DLHs
Order processing
Number of orders
600 Orders
Customer Support
Number of Customers
120 Customers
Other
Costs not allocated to Products or customers
Not Applicable
Distribution of Resource Consumption across Activity Cost Pools
Direct Labour support
Order Processing
Customer Support
Other
Total
Wages and Salaries
20%
40%
30%
10%
100%
Other Overhead Costs
15%
25%
25%
35%
100%
During the year, Cancico Communications completed an order for special telephone equipment for a new customer, HurnTel. This customer did not order any other products during the year. Data concerning that order follow:
Selling price – $220 per unit
Units ordered – 115 units
Direct materials - $195 per unit
Direct labour-hours – 0.6 DLH per unit
Direct labour rate - $22 per DLH
*Prepare a report showing the first-stage allocations of overhead costs to the activity cost pools.
* Compute the activity rates for the activity cost pools
* Prepare a report showing the overhead costs for the order from HurnTel, including customer support costs.
*Prepare a report showing the customer margin for HurnTel.
Overhead Costs
Wages and Salaries
262,500
Other overhead costs
150,000
Total overhead costs
412,500
Explanation / Answer
Answer:1
Answer: 2
Answer: 3
Calculation of overhead cost for HurnTel:
Direct material: $195*115 = $22425
DLH : 0.6*115 = 69 DLH
DLR : $22*69 = $1518
Customer support cost = 968.75*1 = $968.75
Total overhead cost = 24911.75
Answer:4
Cutomer margin for HurnTel = Sales revenue - overhead cost
= (115*$220) - 24911.75= $388.25
Description Direct labor support Order processing Customer support Other Total Wages and salaries 20% 40% 30% 10% 1005 Other overhead costs 15% 25% 25% 35% 100% Wages and salaries $ 52,500.00 $ 1,05,000.00 $ 78,750.00 $ 26,250.00 $ 2,62,500.00 Other overhead costs $ 22,500.00 $ 37,500.00 $ 37,500.00 $ 52,500.00 $ 1,50,000.00 Total $ 75,000.00 $ 1,42,500.00 $ 1,16,250.00 $ 78,750.00 $ 4,12,500.00Related Questions
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