Activity-Based Customer-Driven Costs Suppose that Stillwater Designs has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders, and the non-J listributor tends to place larger, less frequent orders. Both types of distributors are buying the same product. Stillwater Designs provides the following information abou customer-related activities and costs for the most recent quarter: Sales orders Sales calls Service calls Average order size Manufacturing cost/unit Customer costs: Processing sales orders Selling goods Servicing goods Total JIT Distributors 1,100 70 350 750 $125 $3,230,000 1,120,000 1,050,000 $5,400,000 Non-JIT Distributors 110 70 175 7,500 $125
Activity-Based Customer-Driven Costs Suppose that Stillwater Designs has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders, and the non-J listributor tends to place larger, less frequent orders. Both types of distributors are buying the same product. Stillwater Designs provides the following information abou customer-related activities and costs for the most recent quarter: Sales orders Sales calls Service calls Average order size Manufacturing cost/unit Customer costs: Processing sales orders Selling goods Servicing goods Total JIT Distributors 1,100 70 350 750 $125 $3,230,000 1,120,000 1,050,000 $5,400,000 Non-JIT Distributors 110 70 175 7,500 $125
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter11: Strategic Cost Management
Section: Chapter Questions
Problem 11E: Assign the customer-related activity costs to each customer type using activity rates. Now calculate...
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