EXERCISE 7-15 Comprehensive Activity-Based Costing Exercise [LO7-2, L07-3, L07-4, LO7-5] 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 ........ $300,000 100,000 $400,000 Total Activity for the Year Activity Cost Pool Activity Measure Supporting direct labor ..... Order processing ..., Customer support ....... Other ............... Number of direct labor-hours Number of customer orders Number of customers This is an organization- sustaining activity 20,000 DLHS 400 orders 200 customers Not applicable Distribution of Resource Consumption Across Activities Supporting Order Direct Labor Processing Customer Support Other Total Wages and salaries ..... Other overhead costs ... 40% 30% 30% 10% 20% 20% 10% 40% 100% 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 Direct labor-hours .... Selling price ....... Direct materials .... Direct labor 10 units 2 DLHs per unit $300 per unit $180 per unit $50 per unit Required: 1. Using Exhibit 7–6 as a guide, prepare a report showing the first-stage allocations of overhead costs to the activity cost pools. 2. Using Exhibit 7–7 as a guide, compute the activity rates for the activity cost pools. 3. Prepare a report showing the overhead costs for the order from Shenzhen Enterprises includ- ing customer support costs. 4. Using Exhibit 7–12 as a guide, prepare a report showing the customer margin for Shenzhen Enterprises.
