Question

Follow the instructions to create your own worksheet version of the Review Problem in the text on pages 312- value: 0.00 points Download the Applying Excel form and enter formulas in all cells that contain question marks. For example, in cell B26 enter the formula - B4-B8". Note that the worksheet contains a section at the bottom titled "Determine the Product Margin Under a Tradition overhead on the basis of the number of units produced. When completed, that part of the worksheet should con 52 Determine the product margin for the Office Mart orders under a traditional cost system 53 Manufacturing overhead $ 500,000 54 Total activity 1,000 units 55 Manufacturing overhead per unit 500 per unit 56 47,600 57 Sales 58 Costs: 59 Direct materials 60 Direct labor 61 Manufacturing overhead 62 Traditional costing product margin 14,400 4,000 40,000 58,400 (10.800) After entering formulas in all of the cells that contained question marks, verify that the dollar amounts match then Check your worksheet by doubling the units ordered in cell B16 to 160. The customer margin under activity-based your worksheet and correct them. Save your completed Applying Excel form to your computer and then upload it here by clicking download reference file upload a response file (15MI ch_6_Noreen_e_applying_excel_student_form.xlsx Choose File no file selected

Answer 1

a) Firstly we need to calculate activity cost per unit which is shown as follows:-

	Assembling Units	Processing Orders	Supporting Customers	Other
Manufacturing Overhead ($500,000 in the ratio of 50:35:5:10)	250,000 (500,000*50%)	175,000 (500,000*35%)	25,000 (500,000*5%)	50,000 (500,000*10%)
Selling and administration overhead ($300,000 in the ratio of 10:45:25:20)	30,000 (300,000*10%)	135,000 (300,000*45%)	75,000 (300,000*25%)	60,000 (300,000*20%)
Total Activity cost (A)	280,000	310,000	100,000	110,000
Total Activity (B)	1,000 units	250 orders	100 customers
Activity cost per unit (A/B)	280 per unit	1,240 per order	1,000 per customer

Calculation of customer margin under activity based costing (Amounts in $)

Sales revenue (80 units*$595 per unit) (C)	47,600
Costs:
Direct materials cost (80 units*$180)	14,400
Direct labor (80 units*$50)	4,000
Assembling cost (80 units*$280)	22,400
Order processing cost (5 orders*$1,240)	6,200
Supporting customers	1,000
Total cost (D)	48,000
Customer margin (C-D)	(400)

Therefore there is a net loss of $400.