Activity-Based Customer Costing Sleepeze Company produces mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are small, separately owned furniture stores and one is a retail chain. The retail chain buys 60% of the mattresses produced. The 19 smaller customers purchase mattresses in approximately equal quantities, where the orders are about the same size. Data concerning Sleepeze’s customer activity are as follows: Large Retailer Smaller Retailers Units purchased 108,000 72,000 Orders placed 36 3,600 Number of sales calls 18 882 Manufacturing costs $43,200,000 $28,800,000 Order filling costs allocated* $1,363,500 $909,000 Sales force costs allocated* $756,000 $504,000 *Currently allocated on sales volume (units sold). Currently, customer-driven costs are assigned to customers based on units sold, a unit-level driver. Required: Assign costs to customers by using an ABC approach. Round your answers and all intermediate calculations to the nearest dollar. Order filling rate $ per order Selling call rate $ per sales call Cost assignment: Large retailer $ Smaller retailers $
Activity-Based Customer Costing Sleepeze Company produces mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are small, separately owned furniture stores and one is a retail chain. The retail chain buys 60% of the mattresses produced. The 19 smaller customers purchase mattresses in approximately equal quantities, where the orders are about the same size. Data concerning Sleepeze’s customer activity are as follows: Large Retailer Smaller Retailers Units purchased 108,000 72,000 Orders placed 36 3,600 Number of sales calls 18 882 Manufacturing costs $43,200,000 $28,800,000 Order filling costs allocated* $1,363,500 $909,000 Sales force costs allocated* $756,000 $504,000 *Currently allocated on sales volume (units sold). Currently, customer-driven costs are assigned to customers based on units sold, a unit-level driver. Required: Assign costs to customers by using an ABC approach. Round your answers and all intermediate calculations to the nearest dollar. Order filling rate $ per order Selling call rate $ per sales call Cost assignment: Large retailer $ Smaller retailers $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Activity-Based Customer Costing
Sleepeze Company produces mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are small, separately owned furniture stores and one is a retail chain. The retail chain buys 60% of the mattresses produced. The 19 smaller customers purchase mattresses in approximately equal quantities, where the orders are about the same size. Data concerning Sleepeze’s customer activity are as follows:
Large Retailer Smaller Retailers Units purchased 108,000 72,000 Orders placed 36 3,600 Number of sales calls 18 882 Manufacturing costs $43,200,000 $28,800,000 Order filling costs allocated* $1,363,500 $909,000 Sales force costs allocated* $756,000 $504,000 *Currently allocated on sales volume (units sold). Currently, customer-driven costs are assigned to customers based on units sold, a unit-level driver.
Required:
Assign costs to customers by using an ABC approach. Round your answers and all intermediate calculations to the nearest dollar.
Order filling rate $ per order Selling call rate $ per sales call Cost assignment: Large retailer $ Smaller retailers $
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