Problema company using activity based pricing marks up the, Ask an Expert

Accounting

Problem:

A company using activity based pricing marks up the direct cost of goods by 40% plus charges customers for indirect costs based on the activities utilized by the customer. Indirect costs are charged as follows: $6.00 per order placed; $3.00 per separate item ordered; $28.00 per return. A customer places 10 orders with a total direct cost of $2,000, orders 300 separate items, and makes 5 returns.

Required:

Question: What will the customer be charged?

A) $3,000

B) $3,900

C) $5,330

D) $5,750

Note: Show supporting computations in good form.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91167222

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