Cumberland Enterprises makes a variety of products that it sells to other busine

Question

Cumberland Enterprises makes a variety of products that it sells to other businesses. The company's activity-based costing system has four 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 Measure Direct labor-hours (DLHs) Number of batches Number of orders Activity Rate $ 5.65 per DLH $ 146.65 per batch $ 80.05 per order $2,663.00 per customer Number of customers The cost of serving customers, $2,663.00 per customer, is the cost of serving a customer for one year. Steckman Corporation buys only one of the company's products which Cumberland Enterprises sells for $22.05 per unit. Last year Steckman Corporation ordered a total of 1,200 units of this product in 4 orders. To fill the orders, 8batches were required. The direct materials cost is $7.65 per unit and the direct labor cost is $5.20 per unit. Each unit requires 0.30 DLHs According to the ABC system, the customer margin for this customer this past year was closest to:

Explanation / Answer

Calculate customer margin :

According to the ABC system, the customer margin for this customer this past year was closest to $4849.60

Sales (22.05*1200) 26460 Less: Cost Direct material (7.65*1200) 9180 Direct labour (1200*5.20) 6240 Supporting assembly (1200*.3*5.65) 2034 Processing batches (146.65*8) 1173.20 Processing orders = (80.05*4) 320.20 Serving customers 2663 Total cost 21610.40 Customer margin 4849.60

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.