Problem 1: Advanced Products Corporation produces a fire-resistant commercial filing cabinet that it sells to office furniture distributors. The company has a simple ABC system that it uses for internal decision-making purposes. The company has two overhead departments, whose costs are listed below: Overhead Costs Manufacturing overhead……. $500000 Selling and administrative overhead 300000 Total overhead costs $800000 The company’s ABC system has the following activity cost pools and activity measures: Activity Cost Pool Activity Measure Assembling units. Number of units Processing orders Number of customer orders Customer support Number of customers Other… These costs are not allocated to products or customers Costs assigned to the other activity cost pool have no activity measure they consist of the costs of unused capacity and organization-sustaining costs, neither of which are assigned to Advanced Products distributes the costs of manufacturing overhead and selling and administrative overhead to the activity cost pools based on interviews with employees as reported below: Manufacturing overhead… Selling and administrative overtread. Total activity…. Assembling Processing Customer Units Orders Support 50% 35% 0% 15% 1000 units 250 orders 10 customers Other Total 10% 00% 20% 00% a. Prepare a report showing the first stage allocations of overhead costs to the activity cost pools. b. Compute the activity rates for the activity cost pools c. Prepare a report showing the overhead costs attributable to Shenzhen Enterprises, one of Advanced Product’s customers. Last year, Shenzhen ordered filing cabinets four different times. Shenzhen ordered 80 filing cabinets in total during the year. d. The selling price of a filing cabinet is $595. The cost of direct materials is $180 per filing cabinet, and direct labor is $50 per filing cabinet. What is the customer margin of Shenzhen Enterprises?
