Assume a company’s activity-based costing system includes three activities with the following activity rates: Activity Cost Pool Activity Rate Travel $ 2 per mile driven Deliveries $ 50 per delivery Customer service $ 22 per phone call Two of the company’s many customers include Customer A and Customer B. These two customers consumed the company’s activities as follows: Total Expected Activity Customer A Customer B Travel (number of miles driven) 340 250 Deliveries (number of deliveries) 15 5 Customer service (number of phone calls) 20 12 How much cost would be assigned from the Travel activity to Customer A?
Assume a company’s activity-based costing system includes three activities with the following activity rates: Activity Cost Pool Activity Rate Travel $ 2 per mile driven Deliveries $ 50 per delivery Customer service $ 22 per phone call Two of the company’s many customers include Customer A and Customer B. These two customers consumed the company’s activities as follows: Total Expected Activity Customer A Customer B Travel (number of miles driven) 340 250 Deliveries (number of deliveries) 15 5 Customer service (number of phone calls) 20 12 How much cost would be assigned from the Travel activity to Customer A?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Assume a company’s activity-based costing system includes three activities with the following activity rates:
| Activity Cost Pool | Activity Rate | |
|---|---|---|
| Travel | $ 2 | per mile driven |
| Deliveries | $ 50 | per delivery |
| Customer service | $ 22 | per phone call |
Two of the company’s many customers include Customer A and Customer B. These two customers consumed the company’s activities as follows:
| Total Expected Activity | ||
|---|---|---|
| Customer A | Customer B | |
| Travel (number of miles driven) | 340 | 250 |
| Deliveries (number of deliveries) | 15 | 5 |
| Customer service (number of phone calls) | 20 | 12 |
How much cost would be assigned from the Travel activity to Customer A?
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