Esmail Company is a wholesale distributor that uses activity-based costing for all of its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity based costing system:
Overhead costs:
Wages and salaries
$380,000
Other expenses
220,000
Total
$600,000
Distribution of resource consumption:
Activity Cost Pools
Filling Orders
Customer Support
Other
Total
Wages and salaries
55%
35%
10%
100%
Other expenses
25%
55%
20%
100%
The “Other” activity cost pool consists of the costs of idle capacity and organization sustaining costs.
The amount of activity for the year is as follows:
Activity Cost Pool
Activity
Filling orders
4,000 orders
Customer support
60 customers
To the nearest whole dollar, how much wages and salaries cost would be allocated to a customer who made 6 orders in a year?
A) $2,264
B) $2,530
C) $1,998
D) $3,995