3. OfficeMart has found an error in its data. The percentage of selling and administrative overhead attributable to processing orders should be changed to 25% from 45% and the percentage attributable to supporting customers should be changed to 45% from 25%.

(a) Based on new number of orders in Requirement 2, what is the customer margin under activity-based costing when the data are corrected? (Enter a loss as a negative amount.)

(b) Based on new number of orders in Requirement 2, what is the product margin under the traditional costing system when the data are corrected? (Enter a loss as a negative amount.)

B C E A D 1 Chapter 7: Applying Excel 2 3 Data 4 Manufacturing overhead 500,000 $ Selling and administrative overhead 300,000 6 Processing Assembling Units Supporting Customers 7 Other Orders 50% 35% 5% 10% Manufacturing overhead 45% Selling and administrative overhead 10% 25% 20% Total activity 10 1,000 250 100 11 units orders customers 12 OfficeMart orders 13 14 Customers 1 customer 15 Orders 13 orders 16 Number of filing cabinets ordered in total 80 units 17 Selling price 595 18 Direct materials 180 19 Direct labor 50 (c) Which of the following statements are true about what happens when the percentage of selling and administrative overhead attributable to processing orders decliness and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, costs are shifted from the processing orders cost pool to the supporting customers cost pool. When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage administrative overhead attributable to supporting customers increases by the same amount, costs will be shifted from customers who order more frequently to those who order less frequently f selling and When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, the customer margins of those who order more frequently will increase relative to the customer margins of those who order less frequently B C E A D 1 Chapter 7: Applying Excel 2 3 Data 4 Manufacturing overhead 500,000 $ Selling and administrative overhead 300,000 6 Processing Assembling Units Supporting Customers 7 Other Orders 50% 35% 5% 10% Manufacturing overhead 45% Selling and administrative overhead 10% 25% 20% Total activity 10 1,000 250 100 11 units orders customers 12 OfficeMart orders 13 14 Customers 1 customer 15 Orders 13 orders 16 Number of filing cabinets ordered in total 80 units 17 Selling price 595 18 Direct materials 180 19 Direct labor 50 (c) Which of the following statements are true about what happens when the percentage of selling and administrative overhead attributable to processing orders decliness and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, costs are shifted from the processing orders cost pool to the supporting customers cost pool. When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage administrative overhead attributable to supporting customers increases by the same amount, costs will be shifted from customers who order more frequently to those who order less frequently f selling and When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, the customer margins of those who order more frequently will increase relative to the customer margins of those who order less frequently