Question
Tory 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
Tory 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 | $600,000 |
Other expenses | 200,000 |
Total | $800,000 |
Distribution of Resource Consumption:
Activity Cost Pools | ||||
Filling Orders | Customer Support | Other | Total | |
Wages and salaries | 30% | 60% | 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 | 3,500 orders |
Customer support | 35 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
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$37.00
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$18.50
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$27.75
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$62.86
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