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

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 Perform the 1 st stage allocation of overhead costs to the activity cost pools. Compute the activity rates for the activity costs pools. 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. 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. Transcribed Image 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?

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