Question

ScholfieldEnterprises 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	Activity Measure	Activity Rate
Supporting assembly	Direct labor-hours (DLHs)	$	6.55	per DLH
Processing batches	Number of batches	$	138.20	per batch
Processing orders	Number of orders	$	52.60	per order
Serving customers	Number of customers	$	1,191.00	per customer

The cost of serving customers, $1,191.00 per customer, is the cost of serving a customer for one year.

Latif Corporation buys only one of the company’s products which ScholfieldEnterprises sells for $15.60per unit. Last year Latif Corporation ordered a total of 1,100units of this product in 2orders. To fill the orders, 7batches were required. The direct materials cost is $7.85per unit and the direct labor cost is $1.90per unit.Each unit requires 0.10DLHs.

According to the ABC system, the total cost of the activity "Processing batches" for this customer this past year was closest to:

Answer 1

	Activity Cost Pool	Activity Measure	Activity Rate
	Supporting assembly	Direct labor-hours (DLHs)	6.55	per DLH
	Processing batches	Number of batches	138.20	per batch
	Processing orders	Number of orders	52.60	per order
	Serving customers	Number of customers	1,191.00	per customer
	Latif Corporation LY Data:
	Sales Price PU	15.60
	Total Units Ordered	1100
	No of Orders	2.00
	No. of Batchs Required	7.00
	Direct Material PU	7.85
	Direct Labor PU	1.90
	Direct Labor PU in Hours	0.10
	Calculation for Determing Processing Batchs Cost for Latif for LY:
	Activity Cost Pool	Activity Measure	Activity Rate
	Processing batches	Number of batches	138.20	per batch
	Latif Corporation LY Data:
	No. of Batchs Required	7.00
	Cost for Processing:	No of Batchs*Cost per Batch
	Cost for Processing:	7*138.20
	Cost for Processing:	967.40