Question
Craftsman Inc. manufactures high-quality metal instruments using an activity-based costing system with five activity cost pools. The Other activity cost pool is used for all
Craftsman Inc. manufactures high-quality metal instruments using an activity-based costing system with five activity cost pools. The Other activity cost pool is used for all organization-sustaining costs.
Information on these activity cost pools are as follows:
Activity cost pool
| Total cost | Activity measure | Total activity |
Machining | $100,000 | Direct Machine hours | 10, 000 machine hours |
Receiving orders | $20,000 | # of orders | 500 orders |
Designing | $50,000 | Designing hours | 1,000 designing hours |
Customer relation | $30,000 | # of customers | 50 customers |
Other | $80,000 | Not applicable | Not applicable |
In 2021, a customer made 15 orders that consumed 1,000 machine hours and 20 designing hours. The revenue for these 15 orders is $30,000, and the customer margin for this customer is $10,000. What is the total direct cost for this customer? (please provide step-by step answer; otherwise, no point will be awarded).
Craftsman Inc. manufactures high-quality metal instruments using an activity-based costing system with five activity cost pools. The "Other" activity cost pool is used for all organizationsustaining costs. Information on these activity cost pools are as follows: In 2021, a customer made 15 orders that consumed 1,000 machine hours and 20 designing hours. The revenue for these 15 orders is $30,000, and the customer margin for this customer is $10,000. What is the total direct cost for this customer? (please provide step-by step answer; otherwise, no point will be awarded)Step by Step Solution
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