504472144.

xls
Chapter 7: Applying Excel

Data
Manufacturing overhead $500,000
Selling and administrative overhead $300,000

Assembling Processing Supporting

Units Orders Customers Other
Manufacturing overhead 50% 35% 5% 10%
Selling and administrative overhead 10% 45% 25% 20%
Total activity 1,000 250 100
units orders customers

OfficeMart orders:
Customers 1 customer
Orders 4 orders
Number of filing cabinets ordered in total 80 units
Selling price $595
Direct materials $180
Direct labor $50

Enter a formula into each of the cells marked with a ? below

Review Problem: Activity-Based Costing

Perform the first stage allocations

Assembling Processing Supporting
Units Orders Customers Other Total
Manufacturing overhead $ 250,000 $175,000 $25,000 $50,000 $500,000
Selling and administrative overhead $30,000 $135,000 $75,000 $60,000 $300,000
Total cost $280,000 $310,000 $100,000 $110,000 $800,000

Compute the activity rates

Activity Cost Pools Total Cost Total Activity Activity Rate
Assembling units $280,000 1,000 units $280 per unit
Processing orders $310,000 250 orders $1,240 per order
Supporting customers $100,000 100 customers $1,000 per customer

Compute the overhead cost attributable to the OfficeMart orders

Activity Cost Pools Activity Rate Activity ABC Cost
Assembling units $280 per unit 80 units $22,400
Processing orders $1,240 per order 20 orders $24,800
Supporting customers $1,000 per customer 1 customer $1,000

Determine the customer margin for the OfficeMart orders under Activity-Based Costing
Sales $63,600
Costs:
Direct materials $14,800
Direct labor $7,200
Unit-related overhead $22,400
Order-related overhead $24,800
Customer-related overhead $1,000 $70,200
Customer margin ($6,600)
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 504472144.xls

Determine the product margin for the OfficeMart orders under a traditional cost system
Manufacturing overhead $500,000
Total activity 1,000 units
Manufacturing overhead per unit $500 per unit

Sales $ 63,600
Costs:
Direct materials $ 14,800
Direct labor 7,200
Manufacturing overhead 40,000 62,000
Traditional costing product margin $ 1,600

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