Stage 2 ABC for a Wholesale Company : Information is presented for the activity

Question

Stage 2 ABC for a Wholesale Company: Information is presented for the activity costs of Oxford Wholesale Company:

Activity

       Cost per Unit of Activity Driver

Customer relations

$100.00 per customer per month

Selling

       0.06 per sales dollar

Accounting

       5.00 per order

Warehousing

       0.50 per unit shipped

Packing

       0.25 per unit shipped

Shipping

       0.20 per pound shipped

The following information pertains to Oxford Wholesale Company’s activities in Massachusetts for the month of March 2014:

Number of orders

240

Sales revenue

$124,400

Cost of goods sold

$ 68,940

Number of customers

30

Units shipped

4,700

Pounds shipped

70,500

Required:

Determine the profitability of sales in Massachusetts for March 2014.

Activity

       Cost per Unit of Activity Driver

Customer relations

$100.00 per customer per month

Selling

       0.06 per sales dollar

Accounting

       5.00 per order

Warehousing

       0.50 per unit shipped

Packing

       0.25 per unit shipped

Shipping

       0.20 per pound shipped

Explanation / Answer

Statement showing computations Particulars Amount Sales Revenue             124,400.00 Cost of goods Sold                68,940.00 Activity Costs Customer Relation costs =30*100                  3,000.00 Selling Costs = .06 *124,400                  7,464.00 Accounting = 5*240                  1,200.00 Warehousing = .5*4700                  2,350.00 Packing = .25*4700                  1,175.00 Shipping =70,500*.20                14,100.00 Total Activity Costs                29,289.00 Profit = 124,400 - 68,940 - 29,289                26,171.00

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