obdsed Costing Exercise 1L07-2, LO7-3, LO74 nced Products Corporation has suppli

Question

obdsed Costing Exercise 1L07-2, LO7-3, LO74 nced Products Corporation has supplied the following data from its activity-based costing system ges and salaries her overhead costs $300,000 100,000 tal overhead costs 400,800 Total Activity for the ctivity Cost Pool upporting direct labor rder processing ustomer support other Year Activity Measure Number of direct labor-hours Number of customer orders Number of customers This is an organization- 20,000 DLHs 400 orders 200 customers Not applicable sustaining activity Distribution of Resource Consumption Across Activities Customer upport 20% 20% Supporting Order other 10% 48% Total 100% 1e0% Direct Labor Processing Wages and salaries Other overhead costs 40% 30% 30% 10% K Prev 2 of 3 Next

Explanation / Answer

STATEMENT SHOWING FIRST STAGE ALLOCATION OF COST TO ACTIVITY POOL BASIS OF SUPPORTING LABOUR ORDER PROCESSING CUSTOMER SUPPORT OTHERS TOTAL APPORTION IN $ IN $ IN $ IN $ IN $ Wages and salaries 40:30:20:10 120,000 90,000 60,000 30,000 300,000 Other Overheads cost 30:10:20:40 30,000 10,000 20,000 40,000 100,000 TOTAL COST OF ACTIVITY 150,000 100,000 80,000 70,000 400,000 STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL Activity Total Expected Activity ACTIVITY COST POOL Measures Overheads Activity Rate Supporting Labour DLH 150,000 20,000 7.50 Order Processing Orders 100,000 400 250.00 Customer Support Customers 80,000 200 400.00 TOTAL COST OF SHENZHEN ENTERPRISES: Supporting Labour (20 DLH @ 7.50) 150 Order Processing (1 order @ 250) 250 Customer Support (1 customerr @400) 400 Total OH cost 800 TOTAL CUSTOMER MARGIN: Selling Price (10 units @ 300 per unit) 3000 Less: Cost Material (10 units @180) 1800 Labour (10 units @50) 500 OH assigned 800 Customer Margin -100

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