Question
DelauderEnterprises 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
DelauderEnterprises 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) | $ | 3.45 | per DLH |
| Processing batches | Number of batches | $ | 193.30 | per batch |
| Processing orders | Number of orders | $ | 83.05 | per order |
| Serving customers | Number of customers | $ | 1,608.00 | per customer |
The cost of serving customers, $1,608.00 per customer, is the cost of serving a customer for one year. Grennon Corporation buys only one of the companys products. The details of last years purchases of this product are listed below:
| Number of units purchased | 1,500 | units | |
| Number of batches | 5 | batches | |
| Number of orders | 2 | orders | |
| Direct labor-hour requirement | 0.25 | DLHs per unit | |
| Selling price | $ | 18.55 | per unit |
| Direct materials cost | $ | 8.35 | per unit |
| Direct labor cost | $ | 3.95 | per unit |
According to the ABC system, the customer margin for this customer this past year was closest to:
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Knowledge Based System For Information System Audit
Authors: Amol B. Devale, R. V. Kulkarni
1st Edition
6200652376, 978-6200652379
