Marquez Enterprises uses activity-based pricing and marks up the direct cost of goods by 40%.In addition, the customer is charged for indirect costs based on the activities utilized.Indirect costs are as follows: $7 per order placed and $11 per return.A customer places 12 orders with a direct cost of $6,100 and makes 2 returns.How much in indirect costs will the customer be charged?
A)$18
B)$106
C)$6,206
D)$2,440

Question

Quizplus · Accepted Answer

The customer placed 12 orders, so the indirect cost for orders will be 12 x $7 = $84.
The customer made 2 returns, so the indirect cost for returns will be 2 x $11 = $22.
The total indirect cost will be $84 + $22 = $106. 
Adding the direct cost of $6,100 with the indirect cost of $106 (which includes the activity-based pricing markup of 40%), the customer will be charged $6,206. 
Therefore, the correct answer is B.

Marquez Enterprises Uses Activity-Based Pricing and Marks Up the Direct