Activity based customer costing question. ces mattresses for 20 retail outlets.

Question

Activity based customer costing question.
ces mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are small, separately owned furniture stores and one is a Sleepeze Company produc retail chain. The retail chain buys 60% of the mattresses quanties, where the orders are about the same size. Data concerning Sieepeze's customer activity are as follows: produced. The 19 smaller customers purchase mattresses in approximately equal Large Retailer 108,000 36 18 $43,200,000 $1,636,200 $837,000 Smaller Retailers 72,000 3,600 882 $28,800,000 $1,090,800 $558,000 Units purchased Orders placed Number of sales calls Manufacturing costs Order filling costs allocated Sales force costs allocated Currently allocated on sales volume (units sold) Currently, customer-driven costs are assigned to customers based on units sold, a unit-level driver Required: Assign costs to customers by using an ABC approach. Round your answers and all intermediate calculations to the nearest dollar. Order filling rate Selling call rate Cost assignment: Large retailer per order per sales call

Explanation / Answer

Order filling rate = 2727000/3636 = 750 per order

Selling call rate = 1395000/900 = 1550 per sales call

Calculate cost assignment :

Large retailer Small retailer Manufacturing cost 43200000 28800000 Order filling cost 27000 2700000 Sales force cost 27900 1367100 Total cost 43254900 32867100

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