201000 600 orders 20 conceming that order 5 20 per DLH Solut

201,000 600 orders 20% conceming that order 5 20 per DLH

Solution

(1) Allocations of overhead costs to the activity cost pools (Amts in $) Overhead costs Direct Labor Support Order Processing Customer Support Other Total Wages and Salaries (10:30:25:35) 34,400 103,200 86,000 120,400 344,000 Other overhead costs (20:15:20:45) 40,200 30,150 40,200 90,450 201,000 Total 74,600 133,350 126,200 210,850 545,000 2) Calculation of Activity rates (Amounts in $) Activity Activity Costs (A) Activity cost pools (B) Activity rate (A/B) Direct Labor Support 74,600 14000 DLHs $5.33 per DLH Order Processing 133,500 600 orders $222.50 per order Customer Support 126,200 95 customers $1328.42 per customer 3) Direct labor hours for Sky Tank order = 100 units*0.5 DLH per unit = 50 DLHS No. of order = 1 No. of customer = 1 Overhead costs for Sky Tank order = Direct Labor Support+Order Processing+Customer Support = (50DLHs*$5.33)+$222.50+$1328.42 = 266.50+$222.50+$1328.42=$1817.42 4) Calculation of customer margin for Sky Tank (Amounts in $) Sales Revenue (100 units*$275 per unit) 27,500 Less: Direct Materials cost (100 units*$262 per unit) -26,200 Direct Labor cost (50 DLHs*$20per DLH) -1,000 Overhead costs -1,817.42 Customer Margin -1,517.42