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Assume a companys activity-based costing system includes three activities with the following activity rates: ...

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Accounting

Assume a companys activity-based costing system includes three activities with the following activity rates:

Activity Cost Pool Activity Rate
Travel $ 2 per mile driven
Deliveries $ 50 per delivery
Customer service $ 22 per phone call

Two of the companys many customers include Customer A and Customer B. These two customers consumed the companys activities as follows:

Total Expected Activity
Customer A Customer B
Travel (number of miles driven) 300 250
Deliveries (number of deliveries) 15 5
Customer service (number of phone calls) 20 12

If the company earned $2,090 in revenue serving Customer A, then what is the customer margin for this customer?

Multiple Choice

  • $470

  • $400

  • $300

  • $370

Answer & Explanation Solved by verified expert
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