Digerolamo Enterprises makes a variety of products that it sells to other businesses. The company's activity-based costing system has four activity cost pools for assigning costs to products and customers. Details concerning that ABC system are listed below:Activity Cost PoolActivity MeasureActivity RateSupporting assemblyDirect labor-hours (DLHs)$3.55per DLHProcessing batchesNumber of batches$189.35per batchProcessing ordersNumber of orders$59.35per orderServing customersNumber of customers$1,159.00per customerThe cost of serving customers, $1,159.00 per customer, is the cost of serving a customer for one year.Carlacci Corporation buys only one of the company's products which Digerolamo Enterprises sells for $18.85 per unit. Last year Carlacci Corporation ordered a total of 1,500 units
of this product in 4 orders. To fill the orders, 9 batches were required. The direct materials cost is $8.15 per unit and the direct labor cost is $2.60 per unit. Each unit requires 0.15 DLHs.According to the ABC system, the total cost of the activity "Processing batches" for this customer this past year was closest to:
A. $189.35
B. $1,704.15
C. $59.35
D. $1,763.50
Answer: B
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