Distribution of Resource Consumption Across Activities Early in this year, ABC T

Question

  

  

  

Distribution of Resource Consumption Across Activities

  

Early in this year, ABC Tank completed an order for a special vertical envelopment tank for a new customer, Sky Tanks.

This was the only order from this customer for the whole year. Below is some data concerning that order:

  

  

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. (Round your answers to 2 decimal places.)

     

Compute the overhead costs for the order from Sky Tank, including customer support costs. (Round your intermediate calculations and final answers to 2 decimal places.)

     

Prepare a report showing the customer margin for Sky Tank. (Negative customer margins should be indicated by a minus sign. Round your intermediate calculations and final answers to 2 decimal places.)

     

As you might imagine the ABC Tank Manufacturing Company uses an activity-based costing system. ABC has given you the following data that is used in its activity-based costing system:

Explanation / Answer

1) Allocations of overhead costs to the activity cost pools (Amts in $)

2) Calculation of Activity rates (Amounts in $)

3) Direct labor hours for Sky Tank order = 100 units*1 DLH per unit = 100 DLHS

No. of order = 1

No. of customer = 1

Overhead costs for Sky Tank order = Direct Labor Support+Order Processing+Customer Support

= (100 DLHs*$12.85)+$265.59+$1,185.29

= $1,285+$265.59+$1,185.29 = $2,735.88

4) Calculation of customer margin for Sky Tank (Amounts in $)

Overhead costs Direct Labor Support Order Processing Customer Support Other Total Wages and Salaries (10:30:20:40) 34,700 104,100 69,400 138,800 347,000 Other overhead costs (25:15:15:45) 52,250 31,350 31,350 94,050 209,000 Total 86,950 135,450 100,750 232,850 556,000

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