Esmail Company is a wholesale distributor that uses activity based costing for all of its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity based costing system:
|
Overhead costs: |
|
|
Wages and salaries |
$380,000 |
|
Other expenses |
220,000 |
|
Total |
$600,000 |
Distribution of resource consumption:
|
|
Activity Cost Pools |
|||
|
|
Filling Orders |
Customer Support |
Other |
Total |
|
Wages and salaries |
55% |
35% |
10% |
100% |
|
Other expenses |
25% |
55% |
20% |
100% |
The “Other” activity cost pool consists of the costs of idle capacity and organization sustaining costs.
The amount of activity for the year is as follows:
|
Activity Cost Pool |
Activity |
|
Filling orders |
4,000 orders |
|
Customer support |
60 customers |
To the nearest whole dollar, how much wages and salaries cost would be allocated to a customer who made 6 orders in a year?
A) $2,264
B) $2,530
C) $1,998
D) $3,995