Smith Company sells its products at $760 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs: Activity Sales calls Order processing Deliveries Sales returns $ 530 per visit $ 165 per order Cost Driver and Rate $ 60 per order + $0.50 per mile $75 per return and $3 restocking per unit returned Smith Company has gathered the following data pertaining to activities it performed for two of its customers: Number of orders Number of parts per order Sales returns: XBT 23 630 Number of returns Number of units returned (per return) Number of sales calls Miles per delivery Shipping terms What is Smith's total sales-sustaining cost applicable to XBT as a customer? 4 40 10 10 FOB, Factory FOB, NINTO 2 2,130 10 50 6 20 Destination

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Smith Company sells its products at $760 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating
costs:
Activity
Sales calls
Order processing
Deliveries
Sales returns
$ 530 per visit
$ 165 per order
Cost Driver and Rate
$ 60 per order + $0.50 per mile
$75 per return and $3 restocking per unit returned
Smith Company has gathered the following data pertaining to activities it performed for two of its customers:
Number of orders
Number of parts per order
Sales returns:
XBT
23
630
Number of returns
Number of units returned (per return)
Number of sales calls
Miles per delivery
Shipping terms
What is Smith's total sales-sustaining cost applicable to XBT as a customer?
4
40
10
10
FOB, Factory
FOB,
NINTO
2
2,130
10
50
6
20
Destination
Transcribed Image Text:Smith Company sells its products at $760 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs: Activity Sales calls Order processing Deliveries Sales returns $ 530 per visit $ 165 per order Cost Driver and Rate $ 60 per order + $0.50 per mile $75 per return and $3 restocking per unit returned Smith Company has gathered the following data pertaining to activities it performed for two of its customers: Number of orders Number of parts per order Sales returns: XBT 23 630 Number of returns Number of units returned (per return) Number of sales calls Miles per delivery Shipping terms What is Smith's total sales-sustaining cost applicable to XBT as a customer? 4 40 10 10 FOB, Factory FOB, NINTO 2 2,130 10 50 6 20 Destination
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