Orick 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 thatactivity-based costing system are listed below:
The cost of serving customers, $2,574.00 per customer, is the cost of serving a customer for one year. Peiffer Corporation buys only one of the company's products. The details of last year's purchases of this product are listed below:
Required:a. According to the activity-based costing system, what is the cost of the "Supporting assembly" activity for Peiffer Corporation for the year?b. According to theactivity-based costing system, what is the cost of the "Processing batches" activity for Peiffer Corporation for the year?c. According to theactivity-based costing system, what is the cost of the "Processing orders" activity for Peiffer Corporation for the year?d. According to theactivity-based costing system, what is the cost of the "Servicing customers" activity for Peiffer Corporation for the year?e. What is the customer margin on sales to Peiffer Corporation for the year?

Question

Orick 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 thatactivity-based costing system are listed below:

The cost of serving customers, $2,574.00 per customer, is the cost of serving a customer for one year. Peiffer Corporation buys only one of the company's products. The details of last year's purchases of this product are listed below:

Required:a. According to the activity-based costing system, what is the cost of the "Supporting assembly" activity for Peiffer Corporation for the year?b. According to theactivity-based costing system, what is the cost of the "Processing batches" activity for Peiffer Corporation for the year?c. According to theactivity-based costing system, what is the cost of the "Processing orders" activity for Peiffer Corporation for the year?d. According to theactivity-based costing system, what is the cost of the "Servicing customers" activity for Peiffer Corporation for the year?e. What is the customer margin on sales to Peiffer Corporation for the year?

Asutosh Panigrahi · Accepted Answer

Final Answer :

a. Supporting assembly = $6.25 per DLH × 0.15 DLHs per unit × 900 units = $843.75b. Processing batches = $181.40 per batch × 9 batches = $1,632.60c. Processing orders = $54.00 per order × 4 orders = $216.00d. Servicing customers = $2,574.00 per customer × 1 customer = $2,574.00e. Customer Margin-Activity-Based Costing Analysis
a. Supporting assembly = $6.25 per DLH × 0.15 DLHs per unit × 900 units = $843.75b. Processing batches = $181.40 per batch × 9 batches = $1,632.60c. Processing orders = $54.00 per order × 4 orders = $216.00d. Servicing customers = $2,574.00 per customer × 1 customer = $2,574.00e. Customer Margin-Activity-Based Costing Analysis

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