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Pilkerton Enterprises makes a variety of products that it sells to other businesses. The companys activity-based costing system has four activity cost pools for assigning

Pilkerton Enterprises 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) $ 2.50 per DLH
Processing batches Number of batches $ 101.80 per batch
Processing orders Number of orders $ 72.05 per order
Serving customers Number of customers $ 2,533.00 per customer

The cost of serving customers, $2,533.00 per customer, is the cost of serving a customer for one year.

Christoforou Corporation buys only one of the companys products which Pilkerton Enterprises sells for $21.65 per unit. Last year Christoforou Corporation ordered a total of 1,300 units of this product in 3 orders. To fill the orders, 10 batches were required. The direct materials cost is $6.60 per unit and the direct labor cost is $2.75 per unit. Each unit requires 0.15 DLHs.

According to the ABC system, the total overhead cost for this customer this past year was closest to:

a) $12,155.00

b) $4,254.65

c) $16,409.65

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