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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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1. Calculate the total revenues per distributor category, and assign the customer costs to each distributor type by using revenues as the allocation base. Selling price for
one unit is $150. Round calculations to the nearest dollar.
Sales (in units)
Sales
Allocation
Ordering costs
Selling costs
Service costs
$
Total
JIT
2. Conceptual Connection: Calculate the customer cost per distributor type using activity-based cost assignments. Round the interim calculations to the nearest dollar.
Non-JIT
JIT
Non-JIT
For non JIT distributors by how much can the price be decreased without affecting customer profitability? Round your answer to the nearest cent.
per unit
Transcribed Image Text:1. Calculate the total revenues per distributor category, and assign the customer costs to each distributor type by using revenues as the allocation base. Selling price for one unit is $150. Round calculations to the nearest dollar. Sales (in units) Sales Allocation Ordering costs Selling costs Service costs $ Total JIT 2. Conceptual Connection: Calculate the customer cost per distributor type using activity-based cost assignments. Round the interim calculations to the nearest dollar. Non-JIT JIT Non-JIT For non JIT distributors by how much can the price be decreased without affecting customer profitability? Round your answer to the nearest cent. per unit
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-JIT
distributor tends to place larger, less frequent orders. Both types of distributors are buying the same product. Stillwater Designs provides the following information about
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
Required:
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
Transcribed Image Text: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-JIT distributor tends to place larger, less frequent orders. Both types of distributors are buying the same product. Stillwater Designs provides the following information about 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 Required: 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
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