90.2K

Verified Solution

Link Copied!

Required:

1. What would be the total overhead cost per order according to the activity based costing system? In other words, what would be the overall activity rate for the filling orders activity cost pool? (Round to the nearest whole cent.)
2. What would be the total overhead cost per customer according to the activity based costing system? In other words, what would be the overall activity rate for the customer support activity cost pool? (Round to the nearest whole dollar.)
3. To the nearest whole dollar, how much wages and salaries cost would be allocated to a customer who made 6 orders in a year?

Esmail 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 $380,000 Other expenses. 220,000 Total $600,000 Distribution of resource consumption: Activity Cost Pools Customer Filling Orders Support Other Total Wages and salaries 55% 35% 10% 100% Other expenses 25% 55% 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 4,000 orders Filling orders. Customer support .............. 60 customers

Answer & Explanation Solved by verified expert

See Answer