Cumberland 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 that ABC system are listed below: The cost of serving customers, $2,663.00 per customer, is the cost of serving a customer for one year.Steckman Corporation buys only one of the company's products which Cumberland Enterprises sells for $22.05 per unit. Last year Steckman Corporation ordered a total of 1,200 units of this product in 4 orders. To fill the orders, 8 batches were required. The direct materials cost is $7.65 per unit and the direct labor cost is $5.20 per unit. Each unit requires 0.30 DLHs.According to the ABC system, the customer margin for this customer this past year was closest to:
A) $20,269.60
B) $4,849.60
C) $17,280.00
D) $11,040.00

Question

Cumberland 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 that ABC system are listed below:  The cost of serving customers, $2,663.00 per customer, is the cost of serving a customer for one year.Steckman Corporation buys only one of the company's products which Cumberland Enterprises sells for $22.05 per unit. Last year Steckman Corporation ordered a total of 1,200 units of this product in 4 orders. To fill the orders, 8 batches were required. The direct materials cost is $7.65 per unit and the direct labor cost is $5.20 per unit. Each unit requires 0.30 DLHs.According to the ABC system, the customer margin for this customer this past year was closest to:
A) $20,269.60 
B) $4,849.60 
C) $17,280.00 
D) $11,040.00

Quizplus · Accepted Answer

The Answer of Cumberland 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 that ABC system are listed below:  The cost of serving customers, $2,663.00 per customer, is the cost of serving a customer for one year.Steckman Corporation buys only one of the company's products which Cumberland Enterprises sells for $22.05 per unit. Last year Steckman Corporation ordered a total of 1,200 units of this product in 4 orders. To fill the orders, 8 batches were required. The direct materials cost is $7.65 per unit and the direct labor cost is $5.20 per unit. Each unit requires 0.30 DLHs.According to the ABC system, the customer margin for this customer this past year was closest to:
A) $20,269.60 
B) $4,849.60 
C) $17,280.00 
D) $11,040.00

Cumberland Enterprises Makes a Variety of Products That It Sells