Advanced Products Corporation has supplied the following data from its activity-based costing system: Overhed 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 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
Supporting Direct Order Customer Other Total
Labor Processing Support
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
1. Using Exhibit, prepare a report showing the first-stage allocations of overhead costs to the activity cost pools.
2. Using Exhibit, 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. Using Exhibit, prepare a report showing the customer margin for ShenzhenEnterprises.