First Décor Has Analyzed the Indirect Costs Associated with Servicing

question 7

Multiple Choice

First Décor has analyzed the indirect costs associated with servicing its various customers in order to assess customer profitability.Results for the year appear below: $\begin{array}{lrlr}\hline \text { Cost Pool } & \text { Cost } & \text { Cost Driver } & \text { Quantity } \\\hline \text { Processing electronic orders } & \$ 400,000 & \text { N umber of orders } & 40,000 \\\text { Processing non-electronic orders } & 120,000 & \text { N umber of orders } & 8,000 \\\text { Picking orders } & 240,000 & \text { N umber of different products ordered } & 120,000 \\\text { Packaging orders } & 180,000 & \text { N umber of items ordered } & 150,000 \\\text { Returns } & 15,000 & \text { Number of returns } & 3,000\end{array}$ One customer of First Décor placed 30 electronic orders with a total selling price of $25,400.The direct cost of these orders is $17,200.The orders consist of five different products with a total of 2,200 items, and two returns.Using an activity-based costing method, how much are the indirect costs associated with serving this customer?

• A)$2,960
• B)$996
• C)$2,660
• D)$3,110

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