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Scholfield 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
Scholfield 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 activity-based costing system are listed below. Activity Cost Pool Supporting assembly Processing batches Processing orders Serving customers Activity Measure Direct labor-hours (DLHS) Number of batches Number of orders Number of customers Activity Rate $ 6.55 per DLH $ 138.20 per batch $ 52.60 per order $ 1,191.00 per customer The cost of serving customers, $1,191.00 per customer, is the cost of serving a customer for one year. Latif Corporation buys only one of the company's products which Scholfield Enterprises sells for $15.60 per unit. Last year Latif Corporation ordered a total of 1,100 units of this product in 2 orders. To fill the orders, 7 batches were required. The direct materials cost is $7.85 per unit and the direct labor cost is $1.90 per unit. Each unit requires 0.10 direct labor-hours. According to the activity-based costing system, the customer margin for this customer this past year was closest to: Multiple Choice $14,375.90 $6,435.00 $3,450.90 $8.525.00
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