Spigelmyer 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, $1,039.00 per customer, is the cost of serving a customer for one year.
Oelschlaeger Corporation buys only one of the company's products which Spigelmyer Enterprises sells for $18.05 per unit. Last year Oelschlaeger Corporation ordered a total of 1,100 units of this product in 2 orders. To fill the orders, 8 batches were required. The direct materials cost is $6.20 per unit and the direct labor cost is $5.70 per unit. Each unit requires 0.30 DLHs.
Required:
a. According to the ABC system, what is the cost of the "Supporting assembly" activity for Oelschlaeger Corporation for the year?
b. According to the ABC system, what is the cost of the "Processing batches" activity for Oelschlaeger Corporation for the year?
c. According to the ABC system, what is the cost of the "Processing orders" activity for Oelschlaeger Corporation for the year?
d. According to the ABC system, what is the cost of the "Servicing customers" activity for Oelschlaeger Corporation for the year?
e. What is the customer margin on sales to Oelschlaeger Corporation for the year?
Definitions:
Moral Development
The process of learning, understanding, and applying ethical principles and values, shaping one's character and actions.
Ethical Choice
Decision-making based on moral principles and values, aiming to do what is right and beneficial.
Instrumental Stage
Instrumental stage refers to a phase where actions are performed primarily for the purpose of achieving an external goal or reward, often discussed in the context of moral development.
Moral Development
The process through which individuals develop proper attitudes and behaviors toward other people in society, based on social and cultural norms, rules, and laws.
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