Company MN is a wholesale distributor. It uses an ABC system to analyze customer profitability for its small- and medium-sized retail customers. The cost pool, cost driver and other relevant information is shown below. Cost pool Costs Cost driver Small retailer Medium retailer Ordering 300,000 Number of orders 8,000 4,000 Delivery 750,000 Number of deliveries 10,800 4,200 Customer Service 1,200,000 Number of products sold 320,000 480,000 Total overhead 2,250,000 What is the average total overhead cost per product sold to small and medium retailers? (Assuming every item sold requires certain involvement of customer service) Choose answer as below. A. Small: $3.81; Medium: $2.15 B. Small: $3.81; Medium: $1.5 C. Small: $3.81; Medium: $0.44 D. Small: $3.81; Medium: $0.21
Company MN is a wholesale distributor. It uses an ABC system to analyze customer profitability for its small- and medium-sized retail customers. The cost pool, cost driver and other relevant information is shown below.
|
Cost pool |
Costs |
Cost driver |
Small retailer |
Medium retailer |
|---|---|---|---|---|
|
Ordering |
300,000 |
Number of orders |
8,000 |
4,000 |
|
Delivery |
750,000 |
Number of deliveries |
10,800 |
4,200 |
|
Customer Service |
1,200,000 |
Number of products sold |
320,000 |
480,000 |
|
Total |
2,250,000 |
|
|
|
What is the
A. Small: $3.81; Medium: $2.15
B. Small: $3.81; Medium: $1.5
C. Small: $3.81; Medium: $0.44
D. Small: $3.81; Medium: $0.21
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
