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: JIT Distributors Non-JIT Distributors Sales orders 1,000 100 Sales calls 70 70 Service calls 350 175 Average order size 650 6,500 Manufacturing cost/unit $125 $125 Customer costs: Processing sales orders $3,380,000 Selling goods 1,120,000 Servicing goods 1,050,000 Total $5,550,000 Required: 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. JIT Non-JIT Sales (in units) fill in the blank 1 fill in the blank 2 Sales $fill in the blank 3 $fill in the blank 4 Allocation $fill in the blank 5 $fill in the blank 6 2. Conceptual Connection: Calculate the customer cost per distributor type using activity-based cost assignments. Round the interim calculations to the nearest dollar. JIT Non-JIT Ordering costs $fill in the blank 7 $fill in the blank 8 Selling costs $fill in the blank 9 $fill in the blank 10 Service costs $fill in the blank 11 $fill in the blank 12 Total $fill in the blank 13 $fill in the blank 14 For non JIT distributors by how much can the price be decreased without affecting customer profitability? Round your answer to the nearest cent. $fill in the blank 15 per unit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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:

	JIT Distributors		Non-JIT Distributors
Sales orders	1,000		100
Sales calls	70	70
Service calls	350	175
Average order size	650	6,500
Manufacturing cost/unit	$125	$125
Customer costs:
Processing sales orders	$3,380,000
Selling goods	1,120,000
Servicing goods	1,050,000
Total	$5,550,000

Required:

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.

	JIT	Non-JIT
Sales (in units)	fill in the blank 1		fill in the blank 2
Sales	$fill in the blank 3		$fill in the blank 4
Allocation	$fill in the blank 5		$fill in the blank 6

2. Conceptual Connection: Calculate the customer cost per distributor type using activity-based cost assignments. Round the interim calculations to the nearest dollar.

	JIT	Non-JIT
Ordering costs	$fill in the blank 7		$fill in the blank 8
Selling costs	$fill in the blank 9		$fill in the blank 10
Service costs	$fill in the blank 11		$fill in the blank 12
Total	$fill in the blank 13		$fill in the blank 14

For non JIT distributors by how much can the price be decreased without affecting customer profitability? Round your answer to the nearest cent.

$fill in the blank 15 per unit

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