Offerman Corporation is conducting a time-driven activity-based costing study in its Tech 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 Q would be closest to:
A) $0.00
B) $98.40
C) $213.20
D) $114.80

Question

Offerman Corporation is conducting a time-driven activity-based costing study in its Tech 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 Q would be closest to:
A) $0.00 
B) $98.40 
C) $213.20 
D) $114.80

Quizplus · Accepted Answer

To determine the total cost assigned to Customer Q, we need to use the formula:
Total cost assigned = (Total time spent on activities for Customer Q * Cost per minute of each activity) + Additional direct costs for Customer Q.

For Customer Q, the total time spent on activities is:
- Tier 2 support: 126 minutes 
- Tier 1 support: 120 minutes

Total time spent on activities = 126 + 120 = 246 minutes

The cost per minute of each activity is as follows:
- Tier 2 support: $0.80
- Tier 1 support: $0.40

Using these values, we can calculate the total cost assigned to Customer Q as follows:

Total cost assigned = (246 minutes * ($0.80 per minute for Tier 2 support + $0.40 per minute for Tier 1 support)) + $37.60 (Additional direct costs for Customer Q)

Total cost assigned = (246 * $1.20) + $37.60 = $295.20

Therefore, the closest answer choice to the total cost assigned to Customer Q is C) $213.20.

Offerman Corporation Is Conducting a Time-Driven Activity-Based Costing Study in Its