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

Question

Digerolamo 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 Poo.l Supporting assembly Processing batches Processing orders Serving customers Activity Measure Direct labor-hours (DLHs) Number of batches Number of orders Number of customers Activity Rate $ 3.55 per DLH 189.35 per batch $ 59.35 per order $1,159.8e per customer The cost of serving customers, $1,159.00 per customer, is the cost of serving a customer for one year Carlacci Corporation buys only one of the company's products which Digerolamo Enterprises sells for $18.85 per unit. Last year Carlacci Corporation ordered a total of 1,500 units of this product in 4 orders. To fill the orders, 9 batches were required. The direct materials cost is $8.15 per unit and the direct labor cost is $2.60 per unit. Each unit requires 0.15 DLHs. According to the ABC system, the total cost of the activity "Processing batches' for this customer this past year was closest to: Multiple Choice $59.35 $1,704.15 re to search D-1 3 5 6

Explanation / Answer

Ans. Option B 1704.15 *Calculation: Activity cost pool Activity Activity rate Total cost Processing batches 9 batches 189.35 1704.15 Total cost = 9 * 189.35 1704.15 *Last year 9 batches were required to fill the order.

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