Silicon Optics has supplied the following data for use in its activity-based costing system:

Silicon Optics has supplied the following data for use in its activity-based costing system:

Overhead Costs
Wages and salaries	$	356,000
Other overhead costs		197,000
Total overhead costs	$	553,000

Activity Cost Pool	Activity Measure	Total Activity
Direct labor support	Number of direct labor-hours	14,000	DLHs
Order processing	Number of orders	500	orders
Customer support	Number of customers	95	customers
Other	This is an organization-sustaining activity	Not applicable

	Distribution of Resource Consumption Across Activities
	Direct Labor Support		Order Processing		Customer Support		Other		Total
Wages and salaries	20	%	30	%	15	%	35	%	100	%
Other overhead costs	30	%	15	%	15	%	40	%	100	%

During the year, Silicon Optics completed an order for a special optical switch for a new customer, Indus Telecom. This customer did not order any other products during the year. Data concerning that order follow:

Data Concerning the Indus Telecom Order
Selling price	$	265	per unit
Units ordered		100	units
Direct materials	$	268	per unit
Direct labor-hours		0.4	DLH per unit
Direct labor rate	$	23	per DLH

Required:
1.	Prepare a report showing the first-stage allocations of overhead costs to the activity cost pools. (Omit the "$" sign in your response.)

	Direct Labor Support	Order Processing	Customer Support	Other	Totals
Wages and salaries	$	$	$	$	$
Other overhead costs
Total cost	$	$	$	$	$

2.	Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Activity Cost Pools	Activity Rate
Direct labor support	$	per DLH
Order processing	$	per order
Customer support	$	per customer

3.	Compute the overhead costs for the order from Indus Telecom, including customer support costs. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

Activity Cost Pool	ABC Cost
Direct labor support	$
Order processing
Customer support
Total	$

4.	Prepare a report showing the customer margin for Indus Telecom. (Input all amounts as positive values except losses which should be indicated by a minus sign. Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

Indus Telecom Customer Margin—ABC Analysis
Sales		$
Costs:
Direct materials	$
Direct labor
Direct labor support overhead
Order processing overhead
Customer support overhead
Customer margin		$

Explanation:

1.

First-stage allocations of overhead costs to the activity cost pools:

Wages and salaries:

Direct labor support: $356,000 × 20% =$71,200

Order processing: $356,000 × 30% = $106,800

Customer support: $356,000 × 15% = $53,400

Other: $356,000 × 35% = $124,600

Other overhead costs:

Direct labor support: $197,000 × 30% = $59,100

Order processing: $197,000 × 15% = $29,550

Customer support: $197,000 × 15% = $29,550

Other: $197,000 × $40% = $78,800

2.

Computation of activity rates:

Activity Cost Pool	(a) Total Cost		(b) Total Activity		(a) ÷ (b) Activity Rate
Direct labor support	$	130,300	14,000	DLHs		$ 9.31	per DLH
Order processing	$	136,350	500	orders		$ 272.70	per order
Customer support	$	82,950	95	customers		$ 873.16	per customer

3.

Computation of the overhead costs for the Indus Telecom order:

Activity Cost Pool	(a) Activity Rate			(b) Activity		(a) × (b) ABC Cost
Supporting direct labor	$	9.31	per DLH	40	DLHs*	$	372.40
Order processing	$	272.70	per order	1	order		272.70
Customer support	$	873.16	per customer	1	customer		873.16
Total						$	1,518.26

*0.4 DLH per unit × 100 units = 40 DLHs

4.

Sales (100 units × $265 per unit) = $26,500

Direct materials ($268 per unit × 100 units) = $26,800

Direct labor ($23 per DLH × 0.4 DLH per unit × 100 units) = $920