Advanced Products Corporation has supplied the following data from its activity-based costing system: Overhead Costs Wages and salaries. Other overhead costs. Total overhead costs. Activity Cost Pool Supporting direct labor Order processing Customer support Other Wages and salaries Other overhead costs. $300,000 100,000 $ 400,000 Distribution of Resource Consumption Across Activities Supporting Direct Order Processing 30% 10% Data Concerning the Shenzhen Units ordered Direct labor-hours Activity Measure Number of direct labor-hours Number of customer orders Number of customers Selling price Direct materials. Direct labor This is an organization- sustaining activity Labor 40% 30% Enterprises Order 10 units. 2 DLHS per unit Total Activity for the Year 20,000 DLHS $300 per unit $180 per unit $50 per unit. 400 orders 200 customers Not applicable 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: Customer Support 20% 20% Other 10% 40% Total 100% 100% Required: 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. Calculate the total overhead costs for the order from Shenzhen Enterprises including customer support costs. 4. Calculate the customer margin for Shenzhen Enterprises.

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Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.