Advanced Products Corporation has supplied the following data from its activity-based costing system:**Overhead Costs**- Wages and salaries: $300,000- Other overhead costs: $100,000- Total overhead costs: $400,000**Activity Cost Pool**- **Activity Measure** - 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 Labor** - Wages and salaries: 40% - Other overhead costs: 30% - **Order Processing** - Wages and salaries: 30% - Other overhead costs: 10%- **Customer Support** - Wages and salaries: 20% - Other overhead costs: 20%- **Other** - Wages and salaries: 10% - Other overhead costs: 40%- Total for both wages and salaries and other overhead costs: 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 is as follows:**Data Concerning the Shenzhen Enterprises Order**- Units ordered: 10 units- Direct labor-hours: 2 DLHs per unit- Selling price: $300 per unit- Direct materials: $100 per unit- Direct labor: $50 per unit**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. ### Overhead Cost Allocation Report#### ObjectivePrepare a report showing the first-stage allocations of overhead costs to the activity cost pools.#### Activity Cost Pools| | **Direct Labor Support** | **Order Processing** | **Customer Support** | **Other** | **Totals** ||-----------------------|--------------------------|----------------------|----------------------|-----------|------------|| **Wages and Salaries**| | | | | || **Other Overhead Costs** | | | | | || **Total Cost** | | | | | |This table is used to systematically allocate the overhead costs such as wages, salaries, and other overhead expenses to specific activity cost pools, which include Direct Labor Support, Order Processing, Customer Support, and Other. The totals column will sum up all the allocated costs for each category.

Answered: Required: 1. Prepare a report showing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

Advanced Products Corporation has supplied the following data from its activity-based costing system:

**Overhead Costs**
- Wages and salaries: $300,000
- Other overhead costs: $100,000
- Total overhead costs: $400,000

**Activity Cost Pool**
- **Activity Measure**
- 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 Labor**
- Wages and salaries: 40%
- Other overhead costs: 30%

- **Order Processing**
- Wages and salaries: 30%
- Other overhead costs: 10%

- **Customer Support**
- Wages and salaries: 20%
- Other overhead costs: 20%

- **Other**
- Wages and salaries: 10%
- Other overhead costs: 40%

- Total for both wages and salaries and other overhead costs: 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 is as follows:

**Data Concerning the Shenzhen Enterprises Order**
- Units ordered: 10 units
- Direct labor-hours: 2 DLHs per unit
- Selling price: $300 per unit
- Direct materials: $100 per unit
- Direct labor: $50 per unit

**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.

### Overhead Cost Allocation Report

#### Objective
Prepare a report showing the first-stage allocations of overhead costs to the activity cost pools.

#### Activity Cost Pools

| | **Direct Labor Support** | **Order Processing** | **Customer Support** | **Other** | **Totals** |
|-----------------------|--------------------------|----------------------|----------------------|-----------|------------|
| **Wages and Salaries**| | | | | |
| **Other Overhead Costs** | | | | | |
| **Total Cost** | | | | | |

This table is used to systematically allocate the overhead costs such as wages, salaries, and other overhead expenses to specific activity cost pools, which include Direct Labor Support, Order Processing, Customer Support, and Other. The totals column will sum up all the allocated costs for each category.

Expert Solution

Step 1: Defining activity based costing

"Since you have posted a question with multiple sub-parts, we will only solve the first three sub-parts for you. To get the remaining sub-parts solved please repost the complete question and mention the sub-parts to be solved."

Traditionally, the overheads have been assigned by using one or two predetermined overhead rates based on one or two allocation bases. Under the Activity Based Costing method, the total overhead cost is first classified into various cost pool activities. Each activity cost pool is then assigned a cost driver, which is used to determine the activity rates for each activity. The activity rates so calculated are then used to allocate the overheads based on the actual usage of the cost driver.

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions