Asked by Fantasia Jessie on May 22, 2024
Verified
Krueger Corporation is conducting a time-driven activity-based costing study in its Customer Support Department. The company has provided the following data to aid in that study: On the Customer Cost Analysis report in time-driven activity-based costing, the total cost assigned to Customer U would be closest to:
A) $93.60
B) $125.10
C) $0.00
D) $31.50
Time-Driven Activity-Based Costing
A costing method that calculates costs based on the actual time activities take and the cost of supplying resources to these activities.
Customer Support Department
A specialized team within a company tasked with addressing customer inquiries, problems, and needs, aiming to enhance customer satisfaction and loyalty.
Customer Cost Analysis
An evaluation of all the costs involved in acquiring and retaining customers, used to determine the profitability of customer relationships.
- Calculate the sum total of expenses earmarked for customers utilizing insights from time-driven activity-based costing.
Verified Answer
For Customer U:
- Inquiry handling cost = 0 x 2.5 = 0
- Technical support cost = 7 x 5.8 = 40.6
- Account management cost = 3 x 8.5 = 25.5
- Billing support cost = 4 x 4.4 = 17.6
- Total cost assigned to Customer U = 0 + 40.6 + 25.5 + 17.6 = $83.70
However, we also need to add the fixed cost component of $41.40 that is allocated evenly across all customers.
- Total cost assigned to Customer U = $83.70 + $41.40 = $125.10
Therefore, the closest answer would be B) $125.10.
Learning Objectives
- Calculate the sum total of expenses earmarked for customers utilizing insights from time-driven activity-based costing.
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