Alrex company is using an activity-based costing (ABC) system. The company produces and sells two products: Basic and Pro. The company consists of two departments: Production (where all manufacturing activities are taken) and Marketing (which engages in selling and admin activity only). The ABC system includes in unit product costs all costs easily associated with units. In addition, in the ABC system, there are four major indirect activities: Machine Setups, Special Processing, Factory Supervision, and Customer Relation.

The prices, direct material cost (DM), shipping cost and direct labor-hours (DLHs) are given below for one unit of the product, as well as the total units produced and sold.

Product	Price	DM	DLHs	Hourly Wage-DL	Shipping Cost	Units
Basic	$180	$50	1	$10	$1	6,000
Pro	$320	$80	2	$12	$4	4,000

The company collected the data for ABC as follows:

Activity Cost Pool	Activity Measure	Estimated OH cost	Activity measures used
			Basic	Pro
Machine Setup	# of setups	$ 472,500	60	120
Special Processing	Machine hours	$ 360,000	6,000	10,000
Factory Supervision	DLH	$ 224,000
Customer Relation (10 customers)	# of customers	$ 240,000

1.For Alrex Company, batch-level activities include (choose the most complete answer):

2. How much is the ABC customer margin of customer B? (Choose the closest amount.)

3. Under the ABC system, what is the unit product cost for Basic? (Choose the closest amount.)

Multiple Choice

1.

• Factory Supervision

• Machine Setup, Special Processing, and Factory Supervision

• Machine Setup

• Special Processing

• Special Processing and Factory Supervision

2.

Multiple Choice

• $ 135,500

• $ 159,500

• $ 153,500

• $ 129,500

3.

Multiple Choice

• $125.75

• $124.75

• $129.75

• $275.00