# 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

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;
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.
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
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?