Reference no: EM132501200
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* $1,308,960 $872,640
Sales force costs allocated* $783,000 $522,000
*Currently allocated on sales volume (units sold).
Currently, customer-driven costs are assigned to customers based on units sold, a unit-level driver.
Required:
Question 1: Assign costs to customers by using an ABC approach. Round your answers and all intermediate calculations to the nearest dollar.
Order filling rate$ per order
Selling call rate$ per sales call
Cost assignment:
Large retailer$ Smaller retailers$
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