Question
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
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A) $0.66
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B) $110.00
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C) $7,205.00
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D) $720.50
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