This exercise should be assigned in conjunction with Exercise 8-12. The results of the first-stage allocation of the activity-based costing system at Transvaal Mining Tools Ltd., in which the activity rates were computed, appear below:

Required:
1. Using Exhibit 8A–3 as a guide, prepare a report showing the overhead cost of the order for hard rock drills discussed in Exercise 8-12. What is the total overhead cost of the order?
2. Explain the two different perspectives this report gives to managers concerning the nature of the overhead costs involved in the order.

Order Customer Product Size Orders Testing Selling Manufacturing overhead: Indirect labor Factory depreciatio Factory utilities .. Factory administration R 9.60 R 231.00 R 36.00 R 0.00 0.00 0.00 12.00 7.00 0.20 0.00 0.0018.00 1.00 46.00 24.00 0.00 Selling and administrative: 0.80 0.00 Taxes and insurance0.00 0.00 Wages and salaries Depreciation 72.00 11.00 0.00 0.00 0.00 0.00 0.00 0.00 965.00 36.00 49.00 432.00 Selling expenses Total overhead cost R 17.60 R 360.00 R 79.00 R 1,494.00