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Cofab makes calculators from purchased parts. It is a manual operation consisting of three stations. Materials cost $1.25 per calculator. Several back office employees handle

Cofab makes calculators from purchased parts. It is a manual operation consisting of three stations. Materials cost $1.25 per calculator. Several back office employees handle the orders and invoices and the company has a sales force that sells the product. The following are the cost pools and cost driver information for each activity.

Activity

Driver

Driver Frequency

Cost

Assembly

Units made

750,000

$562,500

Order processing

Orders taken

10,000

$200,000

Invoicing

Invoices mailed

25,000

$150,000

Accounting

Checks received

50,000

$250,000

Sales

Orders taken

10,000

$300,000

  1. Calculate the activity rates for each of the activity cost pools

  2. If one customer buys 5,000 units in one order, which takes 2 invoices to get payment and payment arrives in 3 checks that are processed by Accounting. What is the total cost of this customers order?

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