Question

In: Accounting

CR Black has supplied the following data for use in its activity based costing system: Overhead...

CR Black has supplied the following data for use in its activity based costing system:

Overhead Costs:

Wages and Salaries $ 700,000 Other Overhead Costs $ 400,000 Total Overhead Costs $1,100,000

Activity Cost Pool:

Direct Labor Support

Order Processing

Customer Support

Other

Activity Measure:

Number of direct labor-hours

Number of orders

Number of Customers

This is an organizationSustaining activity

Total Activity:

10,000 DLHs

500 Orders

100 customers

Not applicable

Selling Price $700 per unit Units Ordered 100 units Direct materials $350 per unit Direct labor-hours (DLH) 0.5 DLH per unit Direct labor rate $25 per DLH

Distribution of Resource Consumption across Activities

Direct Labor Support

 Order processing Costomer Support Other Total
Wages and Salaries 30% 35% 25% 10% 100%
Other Overhead Costs 25% 15% 20% 40% 100%

During the year, CR Black completed an order for a special optical switch for a new customer, Gucwa Telecom. The customer did not order any other products during the year. Data concerning that order follow:

Data concerning the Calandra Telecom Order

Selling Price $700 per unit
Units Ordered 100 units
Direct Materials $350 per unit
Direct Labor-hours (DLH) 0.5 DLH
Direct labor rate $25 per DLH

5) Prepare a report showing the overhead costs for the order from Calandra, including customer support costs, and prepare a report showing the customer margin for Calandra Telecom.

Please show all work!!

Solutions

Expert Solution

3) Prepare a report showing the first-stage allocation of overhead costs to each activity cost pool, and compute the activity rate for each activity cost pool

Direct labor support Order processing Customer support Other Total
Wages and salaries 210000 245000 175000 70000 700000
Other overhead cost 100000 60000 80000 160000 400000
Total 310000 305000 255000 230000 1100000

Calculate activity rate

Estimated overhead Estimated activity Activity rate
Direct labor support 310000 10000 DLH 31 per DLH
Order processing 305000 500 Order 610 per order
Customer support 255000 100 Customer 2550 per customer

5) Calculate overhead cost

Direct labor support (100*.5*31) 1550
Order processing 610
Customer support 2550
Total overhead cost 4710

calculate customer margin

Sales 70000
Direct material (350*100) 35000
Direct labor (100*.5*25) 1250
Overhead cost 4710
Customer margin 29040

ekkarill92 answered 1 month ago
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