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2. Assume that OfficeMart places orders more frequently, but everything else remains the same. On your...

2. Assume that OfficeMart places orders more frequently, but everything else remains the same. On your worksheet increase the1 Chapter 7: Applying Excel 3 4 5 Data Manufacturing overhead Selling and administrative overhead $ $ 500,000 300,000 Other 8(a) What is the customer margin under activity-based costing when the number of orders increases to 20? (Enter a loss as a ne(c) Which of the following statements are true? (You may select more than one answer. Single click the box with the question

2. Assume that OfficeMart places orders more frequently, but everything else remains the same. On your worksheet increase the number of orders from 4 to 20. (Prior to completing this requirement, change all worksheet figures back to their original amounts.)
1 Chapter 7: Applying Excel 3 4 5 Data Manufacturing overhead Selling and administrative overhead $ $ 500,000 300,000 Other 8 9 10 Manufacturing overhead Selling and administrative overhead Total activity Assembling Units 50% 10% 1,000 units Processing Orders 35% 45% 250 orders Supporting Customers 5% 25% 100 10% 20% 11 customers 12 13 OfficeMart orders: 14 Customers 15 Orders 16 Number of filing cabinets ordered in total 17 Selling price 18 Direct materials 19 Direct labor 1 customer 20 orders 80 units 595 180
(a) What is the customer margin under activity-based costing when the number of orders increases to 20? (Enter a loss as a negative amount.) Customer margin under activity-based costing (b) What is the product margin under the traditional costing system when the number of orders increases to 20? (Enter a loss as a negative amount.) Product margin under the traditional costing system
(c) Which of the following statements are true? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) ? If a customer orders more frequently, but orders the same total number of units over the course of a year, the customer margin under activity based costing will decrease. 7 If a customer orders more frequently, but orders the same total number of units over the course of a year, the product margin under a traditional costing system will decrease. ? If a customer orders more frequently, but orders the same total number of units over the course of a year, the customer margin under activity based costing will be unaffected. 1 If a customer orders more frequently, but orders the same total number of units over the course of a year, the product margin under a traditional costing system will be unaffected.
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Chapter 7: Applying Excel
Data
Manufacturing overhead $500,000
Selling and administrative overhead $300,000
Assembling Units Processing Orders Supporting Customers Other
Manufacturing overhead 50% 35% 5% 10%
Selling and administrative overhead 10% 45% 25% 20%
Total activity 1,000 250 100
units orders customers
OfficeMart orders:
Customers 1 customer
Orders 20 orders
Number of filing cabinets ordered in total 80 units
Selling price $595
Direct materials $180
Direct labor $50
Enter a formula into each of the cells marked with a ? below
Review Problem: Activity-Based Costing
Perform the first stage allocations
Assembling Units Processing Orders Supporting Customers Other Total
Manufacturing overhead $250,000 $175,000 $25,000 $50,000 $500,000
Selling and administrative overhead $30,000 $135,000 $75,000 $60,000 $300,000
Total cost $280,000 $310,000 $100,000 $110,000 $800,000
Compute the activity rates
Activity Cost Pools Total Cost Total Activity Activity Rate
Assembling units $280,000 1,000 units $280 per unit
Processing orders $310,000 250 orders $1,240 per order
Supporting customers $100,000 100 customers $1,000 per customer
Compute the overhead cost attributable to the OfficeMart orders
Activity Cost Pools Activity Rate Activity ABC Cost
Assembling units $280 per unit 80 units $22,400
Processing orders $1,240 per order 20 orders $24,800
Supporting customers $1,000 per customer 1 customer $1,000
Determine the customer margin for the OfficeMart orders under Activity-Based Costing
Sales $47,600
Costs:
Direct materials $14,400
Direct labor $4,000
Unit-related overhead $22,400
Order-related overhead $24,800
Customer-related overhead $1,000 $66,600
Customer margin ($19,000)
Determine the product margin for the OfficeMart orders under a traditional cost system
Manufacturing overhead $500,000
Total activity 1,000 units
Manufacturing overhead per unit $500 per unit
Sales $47,600
Costs:
Direct materials $14,400
Direct labor $4,000
Manufacturing overhead $40,000 $58,400
Traditional costing product margin ($10,800)
a) The customer margin under activity-based costing is now $19000
b) The product margin under traditional costing is now $1,0800
c) Option A and D are correct

A D 3 Data 4 Manufacturing overhead 5 Selling and administrative overhead 500000 300000 8 Manufacturing overhead 9 Selling an
39 =B16 B15 40 Determine the customer margin for the OfficeMart orders under Activity-Based Costing 41 Sales 42 Costs: 43 Dir

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