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myaccount
Jan 29, 2012, 01:55 PM
Silicon Optics has supplied the following data for use in its activity-based costing system:

Overhead Costs
Wages and salaries $ 347,000
Other overhead costs 194,000

Total overhead costs $ 541,000



Activity Cost Pool Activity Measure Total Activity
Direct labor support Number of direct labor-hours 9,500 DLHs
Order processing Number of orders 550 orders
Customer support Number of customers 65 customers
Other This is an organization-sustaining activity Not applicable


Distribution of Resource Consumption Across Activities
Direct Labor Support Order Processing Customer Support Other Total
Wages and salaries 10 % 30 % 20 % 40 % 100 %
Other overhead costs 25 % 10 % 20 % 45 % 100 %

During the year, Silicon Optics completed an order for a special optical switch for a new customer, Indus Telecom. This customer did not order any other products during the year. Data concerning that order follow:

Data Concerning the Indus Telecom Order
Selling price $ 340 per unit
Units ordered 100 units
Direct materials $ 268 per unit
Direct labor-hours 1 DLH per unit
Direct labor rate $ 26 per DLH

Required:
1.
Prepare a report showing the first-stage allocations of overhead costs to the activity cost pools. (Omit the "$" sign in your response.)

Direct Labor
Support Order
Processing Customer
Support Other Totals
Wages and salaries $ $ $ $ $
Other overhead costs

Total cost $ $ $ $ $


2.
Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Activity Cost Pools Activity Rate
Direct labor support $ per DLH
Order processing $ per order
Customer support $ per customer

3.
Compute the overhead costs for the order from Indus Telecom, including customer support costs. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

Activity Cost Pool ABC Cost
Direct labor support $
Order processing
Customer support

Total $


4.
Prepare a report showing the customer margin for Indus Telecom. (Input all amounts as positive values except losses which should be indicated by a minus sign. Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

Indus Telecom
Customer Margin—ABC Analysis
$
Costs:
$





Customer margin