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value: 5.00 points

Exercise 7-11 Comprehensive Activity-Based Costing Exercise [LO2, LO3, LO4, LO5]

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WorksheetLearning Objective: 07-02 Assign costs to cost pools using a first-stage allocation.Learning Objective: 07-05 Use activity-based costing to compute product and customer margins.

Exercise 7-11 Comprehensive Activity-Based Costing Exercise [LO2, LO3, LO4, LO5]Learning Objective: 07-03 Compute activity rates for cost pools.

Difficulty: EasyLearning Objective: 07-04 Assign costs to a cost object using a second-stage allocation.

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Silicon Optics has supplied the following data for use in its activity-based costing system:
Overhead Costs
Wages and salaries	$	360,000
Other overhead costs		206,000
Total overhead costs	$	566,000
Activity Cost Pool	Activity Measure	Total Activity
Direct labor support	Number of direct labor-hours	10,500	DLHs
Order processing	Number of orders	470	orders
Customer support	Number of customers	105	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	20	%	35	%	20	%	25	%	100	%
Other overhead costs	25	%	20	%	20	%	35	%	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	$	250	per unit
Direct labor-hours		0.3	DLH per unit
Direct labor rate	$	29	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 MarginABC Analysis
	$
Costs:
$
Customer margin		$