Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers.Jerry, Inc.Number of ordersUnits per orderSales returns:Number of returnsTotal units returnedNumber of sales callsActivitySales callsOrder processingDeliveriesSales returnsSales salary31,00015011olleen sells its products at $190 per un The firm's gross margin ratio is 25%. Both Jerry and Kate pay their accounts promptly and noaccounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30 months,the firm has determined the following activity costs:Kate Co.60400Required 1 Required 251303Cost Driver and Rate$600 per visit270 per order180 per order210 per return and $4 per unit returned95,000 per monthRequired:1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total costfor Colleen Company to service Jerry, Inc. and Kate Co.2. Compare the profitability of these two customers.Complete this question by entering your answers in the tabs below.Compare the profitability of these two customers. (Loss amounts should be indicated by a minus sign. Round operatingmargin (loss) to 2 decimal places (i.e. .2134 should be entered as 21.34%).)

Answer:- Activity based costing:- It is a technique for assigning overhead costs to items in…

Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Jerry, Inc. Number of orders Units per order Sales returns: Number of returns Total units returned Number of sales calls Activity Sales calls Order processing Deliveries Sales returns Sales salary 3 1,000 Colleen sells its products at $190 per unit. The firm's gross margin ratio is 25%. Both Jerry and Kate pay their accounts promptly and no accounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30 months, the firm has determined the following activity costs: 1 50 11 Required 1 Kate Co. 60 400 Required 2 5 130 3 Required: 1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total cost for Colleen Company to service Jerry, Inc. and Kate Co. 2. Compare the profitability of these two customers. Cost Driver and Rate $ 600 per visit 270 per order 180 per order 210 per return and $4 per unit returned 95,000 per month Complete this question by entering your answers in the tabs below. Compare the profitability of these two customers. (Loss amounts should be indicated by a minus sign. Round operating margin (loss) to 2 decimal places (i.e. .2134 should be entered as 21.34%).)

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter5: Activity-based Costing And Management

Section: Chapter Questions

Problem 57P: Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account...