90.2K

Verified Solution

Link Copied!

Cancico Communications has supplied the following data for use in its ABC system:

Overhead Costs
Wages and salaries	$	275,000
Other overhead costs		155,000
Total overhead costs	$	430,000

Activity Cost Pool	Activity Measure	Total Activity
Direct labour support	Number of direct labour-hours	7,825	DLHs
Order processing	Number of orders	450	orders
Customer support	Number of customers	200	customers
Other	These costs are not allocated to products or customers	NA

	Distribution of Resource Consumption across Activity Cost Pools
	Direct Labour Support			Order Processing			Customer Support			Other			Total
Wages and salaries		20	%		35	%		30	%		15	%		100	%
Other overhead costs		15	%		25	%		25	%		35	%		100	%

During the year, Cancico Communications completed an order for special telephone equipment for a new customer, HurnTel. This customer did not order any other products during the year. Data concerning that order follow:

Selling price	$	225	per unit
Units ordered		140	units
Direct materials	$	200	per unit
Direct labour-hours		0.6	DLH per unit
Direct labour 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.	Prepare a report showing the overhead costs for the order from HurnTel, including customer support costs. (Round your answers to 2 decimal places.)

4.	Prepare a report showing the customer margin for HurnTel. (Round your answers to 2 decimal places.)

Answer & Explanation Solved by verified expert

See Answer