First stage allocation of overhead costs/ Managerial Accounting
Advanced Products Corporation has supplied the following data from its activity-based costing system:
Overheard Cost
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…Numbers 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 sustain activity Not applicable
Distribution of Resources Consumption across Activities
Supporting Order Customer
Direct Labor processing 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 order……………………………………. 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 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.
3 Prepare a report showing the overhead costs for the order from Shenzhen Enterprises including customer support costs.
4 Prepare a report showing the customer margin for Shenzhen Enterprises.
