Question

Type your answer in the box. The total cost in the Product Design cost pool is $200,000 with a total activity of 1,600 designs. The total cost assigned to a customer who had 7 designs done is $_____. (Enter your answer as a whole number.)

Answer 1

The total cost assigned to a customer who had 7 designs done is $875.

Step-by-step explanation:

The total cost assigned to a customer who had 7 designs done can be calculated using the activity-based costing method. Activity-based costing allocates the total cost in a cost pool to each activity based on the activity's total cost and the total activity of that particular activity.

In this case, the total cost in the Product Design cost pool is $200,000 and the total activity is 1,600 designs. Therefore, the cost assigned to each design is $200,000 / 1,600 = $125.

Since the customer had 7 designs done, the total cost assigned to the customer would be 7 designs x $125/design = $875.