DelauderEnterprises makes a variety of products that it sells to other businesse

Question

DelauderEnterprises makes a variety of products that it sells to other businesses. The company's activity based costing system has activity cost pools for assigning costs to products and customers. Details concerning that ABC system are listed below Activity Cost Pool Supporting assembly Processing batches Processing orders Serving customers Activity MeasureActivity Rate Direct labor-hours (DLHs) 3.45 per DLH Number of batches Number of orders Number of customers 193.30 per batch $83.05 per order $1,608.00 per customer The cost of serving customers, $1,608.00 per customer, is the cost of serving a customer for one year Grennon Corporation the company's products. The details of last year's purchases of this product are listed below buys only one of Number of units purchased 1,500 units Number of batches Number of orders Direct labor-hour requirement Selling price Direct materials cost 8.35 per unit Direct labor cost 5 batches 2 orders 0.25 DLHs per unit $18.55 per unit 3.95 per unit

Explanation / Answer

The total cost of supporting Assembly is =

Direct labour hour * rate per DLH

SO, DIRECT labour is = 1500 unit * 0.25 hour / unit

I.e. 375 Direct labour hour

So total cost is = 375 * $3.45 per DLH = $1293.75

So correct option is " C " i.e. $1293.75

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