Question

Fence Industries is preparing its annual profit plan. As part of its analysis of the profitability of its customers, management estimates that the $11,500 for sales support should be assigned to the individual customers from the information given as follows:

	Customer A	Customer B
Units purchased	180,000	280,000
Purchase orders (annual)	6	24

What is the amount of the sales support costs that should be allocated to Customer A, assuming Fence uses purchases orders to compute activity-based costs?

Multiple Choice

• $2,300.

• $9,200.

• $7,000.

• $4,500.

Answer 1