Question
Escoto Company is a wholesale distributor that uses activity-based costing for all of its overhead costs. The company has provided the following data concerning its
Escoto Company is a wholesale distributor that uses activity-based costing for all of its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity-based costing system: Overhead costs: Wages and salaries $540,000 Other expenses 200,000 Total $740,000 Distribution of Resource Consumption: Activity Cost Pools Filling Orders Customer Support Other Total Wages and salaries 10% 80% 10% 100% Other expenses 20% 60% 20% 100% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The amount of activity for the year is as follows: Activity Cost Pool Activity Filling orders 4,000 orders Customer support 40 customers What would be the total overhead cost per order according to the activity-based costing system, rounded to the nearest whole cent? In other words, what would be the overall activity rate for the Filling Orders activity cost pool? Multiple Choice $23.50. $37.00. $27.75. $18.50.
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