Solution-How much would be allocated to its customers

How much would be allocated to its customers

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Question - Pharmax Distributors specializes in the distribution of pharmaceutical products at the retail level. Pharmax's customer base is comprised of three main retail groups: general supermarket chains, large drugstore chains, and small, single-store "Ma & Pa" pharmacies. To evaluate the relative profitability of each customer group, Pharmax plans to use an allocation system that recognizes the relative demands that these groups place on the company's resources. Parmax's chief accountant examined the firm's support costs and activities and collected the following data for a typical operating period:

Support Activity	Budgeted Cost	Total Cost Driver
Order processing	$80,000	2,120 customer orders
Line item processing	$57,000	23,710 line items
Store deliveries	$78,000	1,490 deliveries
Carton handling	$70,000	72,800 cartons shipped

She also gathered the following data for a typical operating period:

	General Supermarket	Drugstore Chains	Ma & Pa
Customer orders	130	390	1,600
Line items	1,820	4,290	17,600
Deliveries	100	290	1,100
Cartons shipped	28,000	26,100	18,700

If Pharmax uses an activity-based costing system to allocate its overhead costs, how much would be allocated to its Ma & Pa customers?

Reference no: EM132224907

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How much would be allocated to its customers

Reference no: EM132224907

Reference no: EM132224907

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