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20) Scholfield Enterprises makes a variety of products that it sells to other businesses. The companys activity-based costing system has four activity cost pools for

20) Scholfield Enterprises makes a variety of products that it sells to other businesses. The companys activity-based costing system has four activity cost pools for assigning costs to products and customers. Details concerning that ABC system are listed below:

Activity Cost Pool Activity Measure Activity Rate
Supporting assembly Direct labor-hours (DLHs) $ 6.55 per DLH
Processing batches Number of batches $ 138.20 per batch
Processing orders Number of orders $ 52.60 per order
Serving customers Number of customers $ 1,191.00 per customer

The cost of serving customers, $1,191.00 per customer, is the cost of serving a customer for one year.

Latif Corporation buys only one of the companys products which Scholfield Enterprises sells for $15.60 per unit. Last year Latif Corporation ordered a total of 1,100 units of this product in 2 orders. To fill the orders, 7 batches were required. The direct materials cost is $7.85 per unit and the direct labor cost is $1.90 per unit. Each unit requires 0.10 DLHs.

According to the ABC system, the total cost of the activity "Supporting assembly" for this customer this past year was closest to:

Multiple Choice

  • A) $0.66

  • B) $110.00

  • C) $7,205.00

  • D) $720.50

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