Practice ABC I Esfeld Company is a wholesale distributor that uses activity-base

Question

Practice ABC I Esfeld 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 Other expenses Total $280,000 $100,000 $380,000 Distribution of resource consumption: Activity Cost Pools Filling Customer Other Total Orders Support Wages and salaries Other expenses 45% 50% 45% 30% 10% 20% 100% 100% The Other" activity tool css of the costs of idle capacity and organization-austaining costs. The amount of activity for the year is as follows: Activity 1,000 orders 50 customers Activity Cost Pool Filling orders Customer support hat 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 su activity cost pool? (Round to the nearest whole dollar.) A) $3,120 B) $2,280 C) $2,850 D) $3,420

Explanation / Answer

Description Overhead Customer support section Customer support cost Wages and salaries        280,000 45%                            126,000 Others        100,000 30%                              30,000 Total        380,000                            156,000 Toal Cost of customer support        156,000 No of customer                  50 Cost per customer 156000/50                                      3,120 So option A is correct

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