(a) Based on new number of orders in Requirement 2, what is the customer margin under activity-based costing when the data are corrected? (Enter a loss as a negative amount.) Customer margin under activity-based costing[ ]I got $(7,840) but it was incorrect. :((b) Based on new number of orders in Requirement 2, what is the product margin under the traditional costing system when the data are corrected? (Enter a loss as a negative amount.) Product margin under the traditional costing system$(10,800)I got $(10,800) and it was correct. :)(c) Which of the following statements are true about what happens when the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount? (You may select more than one answer.) check all that applyWhen the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, costs are shifted from the processing orders cost pool to the supporting customers cost pool.When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, costs will be shifted from customers who order more frequently to those who order less frequently.When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, the customer margins of those who order more frequently will increase relative to the customer margins of those who order less frequently. 3. OfficeMart has found an error in its data. The percentage of selling and administrative overhead attributable to processing ordersshould be changed to 35% from 45% and the percentage attributable to supporting customers should be changed to 35% from 25%.AВCDE1Chapter 7: Applying ExcelData4Manufacturing overhead500,0005Selling and administrative overhead300,000AssemblingProcessingSupportingCustomers7OtherUnitsOrders8Manufacturing overhead50%35%5%10%9.Selling and administrative overhead10%35%35%20%10Total activity1,00025010011unitsorderscustomers1213OfficeMart orders:14Customers1customer15Orders11orders16Number of filing cabinets ordered in total80units17 Selling price59518Direct materials$18019Direct labor50%24 1 Chapter 7: Applying Excel23 Data4 Manufacturing overhead5 Selling and administrative overhead$500,000$300,0006AssemblingProcessingSupporting7UnitsOrdersCustomersOther8 Manufacturing overhead9 Selling and administrative overhead10 Total activity50%35%5%10%10%45%25%20%1,00025010011unitsorderscustomers1213 OfficeMart orders14 Customers15 Orders16 Number of filing cabinets ordered in total17 Selling price18 Direct materials1 customer4 orders160 units$595$180$5019 Direct labor2021 Enter a formula into each of the cells marked with a ? below22 Review Problem: Activity-Based Costing2324 Perform the first stage allocationsAssembling Processing SupportingOrders2$Total2$25UnitsCustomersOther##HHHH $ 50,000$ 250,00030,000$ 280,000175,00026 Manufacturing overhead27 Selling and administrative overhead28 Total cost500,00075,000$ 100.000135,00060,000300,0002$310,000$ 110.000800,0002930 Compute the activity rates31 Activity Cost Pools32 Assembling units33 Processing orders34 Supporting customersActivity Rate$280 per unit$1,240 per order$1,000 per customerTotal CostTotal Activity$ 280.000$ 310,000$ 100,0001,000 units250 orders100 customers3536 Compute the overhead cost attributable to the OfficeMart orders37 Activity Cost Pools38 Assembling units39 Processing orders40 Supporting customersАВС CostActivity Rate$280 per unit$1,240 per order$1,000 per customerActivity$44,800$4,960160 units4 orders1 customer$1,0004142 Determine the customer margin for the OfficeMart orders under Activity-Based Costing43 Sales$95,20044 Costs:45Direct materials$28,80046Direct labor8,00047Unit-related overhead44,80048Order-related overhead4,96049Customer-related overhead1,00087,56050 Customer margin7.6405152 Determine the product margin for the OfficeMart orders under a traditional cost system53 Manufacturing overhead54 Total activity$500,0001,000 units55 Manufacturing overhead per unit$500 per unit5657 Sales58 Costs:$95,20059Direct materials$28,80060Direct labor8,00061Manufacturing overhead62 Traditional costing product margin80,000116,800$(21,600)63

Name: (a) Based on new number of orders in Requirement 2, what is the custom
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Description: (a) Based on new number of orders in Requirement 2, what is the customer margin under activity-based costing when the data are corrected? (Enter a loss as a negative amount.) Customer margin under activity-based costing[ ]I got $(7,840) but it

a. Allocation of Costs Assembling Unit Processing Orders Supporting Customer Others…

(a) Based on new number of orders in Requirement 2, what is the customer margin under activity-based costing when the data are corrected? (Enter a loss as a negative amount.) Customer margin under activity-based costing [ ] I got $(7,840) but it was incorrect. :( (b) Based on new number of orders in Requirement 2, what is the product margin under the traditional costing system when the data are corrected? (Enter a loss as a negative amount.) Product margin under the traditional costing system $(10,800) I got $(10,800) and it was correct. :) (c) Which of the following statements are true about what happens when the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount? (You may select more than one answer.) check all that apply When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, costs are shifted from the processing orders cost pool to the supporting customers cost pool. When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, costs will be shifted from customers who order more frequently to those who order less frequently. When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, the customer margins of those who order more frequently will increase relative to the customer margins of those who order less frequently.

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ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter18: Activity-Based Costing

Section: Chapter Questions

Problem 18.3TIF: Communication The controller of New Wave Sounds Inc. prepared the following product profitability...

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Question

(a) Based on new number of orders in Requirement 2, what is the customer margin under activity-based costing when the data are corrected? (Enter a loss as a negative amount.)

Customer margin under activity-based costing

[ ]

I got $(7,840) but it was incorrect. :(

(b) Based on new number of orders in Requirement 2, what is the product margin under the traditional costing system when the data are corrected? (Enter a loss as a negative amount.)

Product margin under the traditional costing system

$(10,800)

I got $(10,800) and it was correct. :)

(c) Which of the following statements are true about what happens when the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount? (You may select more than one answer.)

check all that apply

When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, costs are shifted from the processing orders cost pool to the supporting customers cost pool.
When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, costs will be shifted from customers who order more frequently to those who order less frequently.
When the percentage of selling and administrative overhead attributable to processing orders declines and the percentage of selling and administrative overhead attributable to supporting customers increases by the same amount, the customer margins of those who order more frequently will increase relative to the customer margins of those who order less frequently.

3. OfficeMart has found an error in its data. The percentage of selling and administrative overhead attributable to processing orders
should be changed to 35% from 45% and the percentage attributable to supporting customers should be changed to 35% from 25%.
A
В
C
D
E
1
Chapter 7: Applying Excel
Data
4
Manufacturing overhead
500,000
5
Selling and administrative overhead
300,000
Assembling
Processing
Supporting
Customers
7
Other
Units
Orders
8
Manufacturing overhead
50%
35%
5%
10%
9.
Selling and administrative overhead
10%
35%
35%
20%
10
Total activity
1,000
250
100
11
units
orders
customers
12
13
OfficeMart orders:
14
Customers
1
customer
15
Orders
11
orders
16
Number of filing cabinets ordered in total
80
units
17 Selling price
595
18
Direct materials
$
180
19
Direct labor
50
%24

1 Chapter 7: Applying Excel
2
3 Data
4 Manufacturing overhead
5 Selling and administrative overhead
$500,000
$300,000
6
Assembling
Processing
Supporting
7
Units
Orders
Customers
Other
8 Manufacturing overhead
9 Selling and administrative overhead
10 Total activity
50%
35%
5%
10%
10%
45%
25%
20%
1,000
250
100
11
units
orders
customers
12
13 OfficeMart orders
14 Customers
15 Orders
16 Number of filing cabinets ordered in total
17 Selling price
18 Direct materials
1 customer
4 orders
160 units
$595
$180
$50
19 Direct labor
20
21 Enter a formula into each of the cells marked with a ? below
22 Review Problem: Activity-Based Costing
23
24 Perform the first stage allocations
Assembling Processing Supporting
Orders
2$
Total
2$
25
Units
Customers
Other
##HHHH $ 50,000
$ 250,000
30,000
$ 280,000
175,000
26 Manufacturing overhead
27 Selling and administrative overhead
28 Total cost
500,000
75,000
$ 100.000
135,000
60,000
300,000
2$
310,000
$ 110.000
800,000
29
30 Compute the activity rates
31 Activity Cost Pools
32 Assembling units
33 Processing orders
34 Supporting customers
Activity Rate
$280 per unit
$1,240 per order
$1,000 per customer
Total Cost
Total Activity
$ 280.000
$ 310,000
$ 100,000
1,000 units
250 orders
100 customers
35
36 Compute the overhead cost attributable to the OfficeMart orders
37 Activity Cost Pools
38 Assembling units
39 Processing orders
40 Supporting customers
АВС Cost
Activity Rate
$280 per unit
$1,240 per order
$1,000 per customer
Activity
$44,800
$4,960
160 units
4 orders
1 customer
$1,000
41
42 Determine the customer margin for the OfficeMart orders under Activity-Based Costing
43 Sales
$
95,200
44 Costs:
45
Direct materials
$
28,800
46
Direct labor
8,000
47
Unit-related overhead
44,800
48
Order-related overhead
4,960
49
Customer-related overhead
1,000
87,560
50 Customer margin
7.640
51
52 Determine the product margin for the OfficeMart orders under a traditional cost system
53 Manufacturing overhead
54 Total activity
$500,000
1,000 units
55 Manufacturing overhead per unit
$500 per unit
56
57 Sales
58 Costs:
$
95,200
59
Direct materials
$
28,800
60
Direct labor
8,000
61
Manufacturing overhead
62 Traditional costing product margin
80,000
116,800
$
(21,600)
63

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