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 $346,000

Other overhead costs $201,000

Total overhead costs $547,000

Activity Cost Pool Activity Measure Total Activity

Direct labor support Number of direct labor-hours 11,000 DLHs

Order processing Number of orders 540orders

Customer support Number of customers 115 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% 25% 15% 40% 100%

Other overhead costs 20% 10% 20% 50% 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 $280 per unit

Units ordered $100 units

Direct materials $255 per unit

Direct labor-hours 0.7 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.

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

3. Compute the overhead costs for the order from Indus Telecom, including customer support costs

4. Prepare a report showing the customer margin for Indus Telecom.

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