Question No.4 Feri Corporation makes a single product. A fire resistant commercial filling cabinet that it sells to office furniture distributors. The company has simple ABC system that it use for...

Question No.4

Feri Corporation makes a single product. A fire resistant commercial filling cabinet that it sells to office furniture distributors. The company has simple ABC system that it use for internal decision making. The company has two overheads departments whose costs are listed below;

        Manufacturing Over head                                                                                $ 500,000

               Selling & Admin overhead                                                                                $ 300,000

      Total overhead Costs                                                                  $ 800,000

The company ABC’s system has the following activity cost pools and activity measures;

        Activity Costs Pool                                                                                 Activity Measures

             Assembling Units………………………     Number of Units

             Processing Order ……………………… Number of Orders

             Supporting Customer ………………….              Number of Customers

  Others………………………………….        Not applicable

Costs assigned to the “others” activity cost pool have no activity measures; they consist of the costs of unused capacity and organization - sustaining cost- neither of which are assigned to products. Orders or customers.

The company distribute the cost of manufacturing overhead and selling admin overhead  to the activity cost pools based on employees interviews, the results of which are reported below:

Distribution of Resource Consumption Across Activity Cost pools

	Assembling Units	Processing Orders	Supporting Customers	Others	Total
Manufacturing Overhead	50%	35%	05%	10%	100%
Selling & Admin overhead	10%	45%	25%	20%	100%
Total Activity	1000 units	250 orders	100 customers

Required

1. Perform the 1^st
   stage allocation of overhead costs to the activity cost pools.


2. Compute the activity rates for the activity costs pools.


3. Office mart is one of ferris corporation’s customer, last year office mart ordered filling cabinets four different times , office mart ordered a total of 100 filing cabinets during the years, overhead cost of these, 100 units and five orders.


4. The selling price of a filling cabinet $ 595, the cost of direct materials is $ 180 per filing cabinet, And direct labour is $ 50 per filling cabinet what is the product margin on the 100 filling cabinets ordered by office mart? How profitable is office mart as a customer?

Note :just solve part 4.

Extracted text: Question No.4 Feri Corporation makes a single product. A fire resistant commercial filing cabinet that it sells to office furniture distributors. The company has simple ABC system that it use for internal decision making. The company has two overheads departments whose costs are listed below; Manufacturing Over head Selling & Admin overhead Total overhead Costs S 500,000 S300.000 The company ABC's system has the following activity cost pools and activity measures, Activity Costs Pool Assembling Units. Processing Order Supporting Customer. Activity Measures Number of Units Number of Orders Number of Customers Others. Not applicable Costs assigned to the "others" activity cost pool have no activity measures; they consist of the costs of unused capacity and organization - sustaining cost- neither of which are assigned to products. Orders or customers. The company distribute the cost of manufacturing overhead and selling admin overhead to the activity cost pools based on employees interviews, the results of which are reported below: Distribution of Resource Consumption Across Activity Cost pools Others Assembling Units 50% Processing Supporting Castomers 05% 25% 100 customers Total Orders Manufacturing Overhead Selling & Admin overhead Total Activity 35% 45% 250 onders 10% 100% 10% 20% 100% 1000 units Required 1. Perform the 1" stage allocation of overhead costs to the activity cost pools. 2. Compute the activity rates for the activity costs pools. 3. Office mart is one of ferris corporation's customer, last year office mart ordered filling cabinets four different times, office mart ordered a total of 100 filing cabinets during the years, overhead cost of these, 100 units and five orders. 4. The selling price of a filling cabinet S 595, the cost of direct materials is $ 180 per filing cabinet, And direct labour is $ 50 per filling cabinet what is the product margin on the 100 filling cabinets ordered by office mart? How profitable is office mart as a customer?