Silicon Optics has supplied the following data for use in itsactivity-based costing system:
Overhead costs
Wages and Salaries $350,000
Other overhead costs $200,000
Total overhead costs $550,000
Activity Cost Pool Activity Measure Total Activity
Direct labour support Number of direct labour hours 10,000 DLHs
Order processing Number of orders 500 orders
Customer support Number of customers 100 customers
Other These costs are not allocated to products or customers Notapplicable
Distribution of Resource Consumption Across Activity Cost Pools
Direct Labour Support Order Processing Customer Support OtherTotal
Wages and salaries 30% 35% 25% 10% 100%`
Other overhead costs 25% 15% 20% 40% 100%
During the year, Silicon Optics completed an order for a specialoptical switch for a new customer, Indus Telecom. This customer didnot order any other products during the year. Data concerning thatorder follow:
Data Concerning the Indus Telecom Order
Selling Price $295 per unit
Units ordered 100 units
Direct materials $264 per unit
Direct labour hours 0.5 DLH per unit
Direct labour rate $25 per DLH
REQUIRED:
1. Using exhibit 7-5 as a guide. prepare a report showing thefirst-stage allocations of overhead costs to activity costpools.
2. Using exhibit 7-6 as a guide, compute the activity rates for theactivity cost pools.
3. Prepare a report showing the overhead costs for the order fromIndus Telecom, include customer support costs.
4. Using Exhibit 7-11 as a guide, prepare a report showing thecustomer margin for Indus Telecom.Â
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