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Custom Products uses activity-based costing (ABC), and has identified the following cost pools and rates for the upcoming fiscal year: Activity Cost Pool Activity Measure

Custom Products uses activity-based costing (ABC), and has identified the following cost pools and rates for the upcoming fiscal year:

Activity Cost Pool

Activity Measure

Activity Rate

Order processing

Number of orders

$25 per order

Design

Design hours

$35 per design hour

Machine setups

Number of setups

$47 per setup

Manufacturing support

Direct labour hours

$48 per direct labour hour

A customer recently placed one order for three custom-designed products (10 units of each design). The order requires the following total material and labour:

Direct Material $90

Direct Labour 4 hours @ $17/hr

This order also requires two design hours and one machine setup.

Required:

  1. Determine the total cost for the new customer order. (5 marks)
  2. Describe a duration driver. Identify one activity cost pool from the list above that uses a duration driver for its activity measure. (2 marks)
  3. Classify each of the activities above as unit-level, batch-level, product-level, customer-level or organization-sustaining. (2 marks)

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