17

Assume a companys activity-based costing system includes three activities with the following activity rates:

Activity Cost Pool	Activity Rate
Travel	$ 2	per mile driven
Deliveries	$ 50	per delivery
Customer service	$ 22	per phone call

Two of the companys many customers include Customer A and Customer B. These two customers consumed the companys activities as follows:

	Total Expected Activity
	Customer A	Customer B
Travel (number of miles driven)	335	250
Deliveries (number of deliveries)	15	5
Customer service (number of phone calls)	20	12

How much cost would be assigned from the Travel activity to Customer A?

Multiple Choice

• $500

• $670

• $60

• $168

16

Assume a companys activity-based costing system includes three activities with the following activity rates:

Activity Cost Pool	Activity Rate
Travel	$ 2	per mile driven
Deliveries	$ 50	per delivery
Customer service	$ 22	per phone call

Two of the companys many customers include Customer A and Customer B. These two customers consumed the companys activities as follows:

	Total Expected Activity
	Customer A	Customer B
Travel (number of miles driven)	300	250
Deliveries (number of deliveries)	15	5
Customer service (number of phone calls)	20	12

If the company earned $2,110 in revenue serving Customer A, then what is the customer margin for this customer?

Multiple Choice

• $490

• $320

• $390

• $420