Escau Corporation is a wholesale distributor that uses activity-based costing fo

Question

Escau Corporation 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 $360,000 Other expenses 150,000 Total $510,000 Distribution of resource consumption: Activity Cost Pools Filling Orders Customer Support Other Total Wages and salaries 35% 55% 10% 100% Other expenses 35% 50% 15% 100% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The activity measures for the activity cost pools for the year are as follows: Activity Cost Pool Activity Filling orders 3,500 orders Customer support 15 customers 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.)

Explanation / Answer

per order cost = 178500 / 3500 =$ 51 per filling order

Filling order customer support other wages and salaries 126000   [360000*.35] 198000    [360000*.55] 36000    [360000*.10] other expense 52500    [150000*.35] 75000     [150000*.50] 22500    [150000*.15] Total 178500 273000 32500

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