Question

Silicon Optics has supplied the following data for use in its activity-based costing system:

  

Overhead Costs
Wages and salaries	$	343,000
Other overhead costs		194,000
Total overhead costs	$	537,000

  

Activity Cost Pool	Activity Measure	Total Activity
Direct labor support	Number of direct labor-hours	12,000	DLHs
Order processing	Number of orders	570	orders
Customer support	Number of customers	100	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	30	%	20	%	20	%	30	%	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	$	270	per unit
Units ordered		100	units
Direct materials	$	254	per unit
Direct labor-hours		0.5	DLH per unit
Direct labor rate	$	27	per DLH

  

Required:
1.	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.)

     

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.)

     

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

     

Answer 1