Review Problem: Activity-Based Costing Ferris Corporation makes a single product-a fire-resistant commercial filing cabinet-that it sells to office furniture distributors. The company has a simple ABC system that it uses for internal decision making. The company has two overhead departments whose costs are 35 follows: The company's ABC system has the following activity cost pools and activity measures: Costs assigned to the "Other" activity cost pool have no activity measure; they consist of organization-sustaining cosis and unused capacity costs-neither of which are assigned to orders, customers, or the product. Ferris Corporation distributes the costs of manufacturing overhead and selling and administrative overhead to the activity cost pools based on employee interviews, the results of which are reported below: Required: 1. Perform the first-stage allocation of overhead costs to the activity cost pools as in [4 Exhibit 7-6. 2. Compute activity rates for the activity cost pools as in Exhibit 7-7. 3. OfficeMart is one of Ferris Corporation's customers. Last year, OfficeMart ordered filing cabinets four different times. OfficeMart ordered a total of 80 filing cabinets during the year. Construct a table as in Exhibit 7 - 10 showing the overhead costs attributable to OfficeMart. 4. The selling price of a filing cabinet is $595. The cost of direct materials is $180 per filing cabinet, and direct labor is $50 per filing cabinet. What is the customer margin of OfficeMart? See Exhibit 7-12 for an example of how to complete this report. Solution to Review Problem 1. The first-stage allocation of costs to the activity cost pools appears below: 2. The activity rates for the activity cost pools are: 3. The overhead cost attributable to OfficeMart would be computed as follows: 4. The customer margin can be computed as follows