Question

Lumber Company produces lumber for many applications. The company had the following data for July:

	Units	Total	Per Unit
Sales	14500	826500	57
Variable Expenses		493000	34
Contribution Margin		333500	23
Fixed Expenses		165000
Net Operating Income		168500

During a meeting with senior leadership, you are asked about several possible scenarios regarding possible changes in sales and costs. Use the spreadsheet to calculate all the scenarios to bring back to the next meeting. Activity cost pool Activity Measure Activity Rate Order size Direct labor hours $14 per direct labor hour Customer orders Customer orders $114 per customer order Quality testing Test hours $74 per hour Sales Sales calls $634 per sales call Order #1 required 475 direct labor hours, 9 hours of quality testing, and 7 sales calls Order #2 required 115 direct labor hours, 48 hours of quality testing, and 19 sales calls Total overhead cost assigned Activity Cost Pool Order #1 Order #2 Total Overhead cost

Answer 1

Answer

Total overhead cost assigned
Activity Cost Pool	Order #1	Order #2
Order size	$6,650	$1,610
Customer Orders	$114	$114
Quality Testing	$666	$3,552
Sales	$4,438	$12,046
Total Overhead cost	$11,868	$17,322

--Working

Total overhead cost assigned
Activity Cost Pool	Order #1	Order #2
Order size	=475*14	=115*14
Customer Orders	=1*114	=1*114
Quality Testing	=9*74	=48*74
Sales	=7*634	=19*634