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The following activities occur at Greenwich Corporation, a company that manufactures a variety of products.
Advanced Products Corporation has supplied the following data from its activity-based costing system: Overhead Costs Wages an
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Answer #1
First Stage allocation of Overhead- Advanced Product Corporation
Direct Labor Support Order Processing Customer Support Other     Total
  Wages and salaries 40% 30% 20% 10% 100%
( 300000* specific %) $120,000 $90,000 $60,000 $30,000 $300,000
  Other overhead costs 30% 10% 20% 40% 100%
( 100000* specific %) $30,000 $10,000 $20,000 $40,000 $100,000
Total $150,000 $100,000 $80,000 $70,000 $400,000
2. Computation of Activity rate
Direct Labor Support Order Processing Customer Support
Cost Pool- Wages & Salaries $120,000 $90,000 $60,000
Activity Pool
Direct Labor Hours 20000
Orders 400
Customers 200
Others
Activity Rate for wages & Salaries $6.00 $225 $300
Cost Pool- other Overhead cost $30,000 $10,000 $20,000
Activity Pool
Direct Labor Hours 20000
Orders 400
Customers 200
Others
Activity Rate for other overhead cost $1.50 $25 $100
Part-3
Direct Labor Support Order Processing Customer Support Total
Activity 20 DLH( 10*2) 1 order 1 customer
Wages and salaries $1,200.00 $225.00 $300.00 $1,725.00
($6*20)
Other overhead costs $30.00 $25.00 $100.00 $155.00
(1.5*20)
Total cost $1,230.00 $250.00 $400.00 $1,880.00
Computation of Custoer Margin
Sales( 10X 300) $3,000.00
Less: Material Cost (180X10) $1,800.00
Less: Labour Cost (50X10) $500.00
Less: Overhead Cost
Direct labour Support $1,230.00
Order Processing $250.00
Customer Support $400.00
Customer Margin -$1,180.00
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