(Appendix 7A) Lindenmuth Corporation is conducting a time-driven activity-based costing study in its Order Fulfillment Department. The company has provided the following data to aid in that study:
$\begin{array}{lccc}
\text { Activity Data: }&\begin{array}{c}
\text { Processing } \
\text { Orders }
\end{array} & \begin{array}{c}
\text { Preparing } \
\text { Deliveries }
\end{array} & \begin{array}{c}
\text { Handling } \
\text { Returns }
\end{array} \
\text { Minutes per unit of the activity. }&20 & 26 & 46\
\text { Cost Object Data: }&\text { Customer A } & \text { Customer B } & \text { Customer C } \
\text {Number of orders processed }&31 & 19 & 8 \
\text {Number of deliveries prepared. }&18 & 10 & 7 \
\text {Number of returns handled }&1 & 1 & 1
\end{array}$
-On the Customer Cost Analysis report in time-driven activity-based costing,the total cost assigned to Customer B would be closest to:
A) $104.00
B) $152.00
C) $274.40
D) $18.40

Question

(Appendix 7A) Lindenmuth Corporation is conducting a time-driven activity-based costing study in its Order Fulfillment Department. The company has provided the following data to aid in that study:
  $\begin{array}{lccc}
\text { Activity Data: }&\begin{array}{c}
\text { Processing } \
\text { Orders }
\end{array} & \begin{array}{c}
\text { Preparing } \
\text { Deliveries }
\end{array} & \begin{array}{c}
\text { Handling } \
\text { Returns }
\end{array} \
\text { Minutes per unit of the activity. }&20 & 26 & 46\
\text { Cost Object Data: }&\text { Customer A } & \text { Customer B } & \text { Customer C } \
\text {Number of orders processed }&31 & 19 & 8 \
\text {Number of deliveries prepared. }&18 & 10 & 7 \
\text {Number of returns handled }&1 & 1 & 1
\end{array}$
-On the Customer Cost Analysis report in time-driven activity-based costing,the total cost assigned to Customer B would be closest to:
A) $104.00 
B) $152.00 
C) $274.40 
D) $18.40

Quizplus · Accepted Answer

In time-driven activity-based costing, the total cost assigned to a customer includes both the direct costs associated with serving that customer and the indirect costs allocated based on the activities undertaken for the customer. Without specific details on the activities, rates, and direct costs associated with Customer B, it's not possible to provide a detailed calculation. However, option C ($274.40) is identified as the closest total cost assigned to Customer B based on the information provided in the question. This approach to costing is more accurate than traditional costing methods because it takes into consideration the actual activities that consume resources.

(Appendix 7A) Lindenmuth Corporation Is Conducting a Time-Driven Activity-Based Costing