Question
QUESTION 12 Leber Enterprises makes a variety of products that it sells to other businesses. The company's activity-based costing system has four activity cost pools
QUESTION 12
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Leber Enterprises makes a variety of products that it sells to other businesses. The company's 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)
$
5.65
per DLH
Processing batches
Number of batches
$
180.00
per batch
Processing orders
Number of orders
$
68.55
per order
Serving customers
Number of customers
$
2,423.00
per customer
The cost of serving customers, $2,423.00 per customer, is the cost of serving a customer for one year. Solecki Corporation buys only one of the company's products. The details of last year's purchases of this product are listed below:
Number of units purchased
900
units
Number of batches
4
batches
Number of orders
1
order
Direct labor-hour requirement
0.20
DLHs per unit
Selling price
$
30.00
per unit
Direct materials cost
$
6.65
per unit
Direct labor cost
$
3.85
per unit
According to the ABC system, the total overhead cost for this customer this past year was closest to:
A. $1,805.55
B. $4,228.55
C. $13,678.55
D. $9,450.00
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