4)What would you consider most important in analyzing the data (product or customer) and why?

5) Given your answer in #4 above which segment should be given more resources (i.e. expanded)? Which segment should be eliminated or reduced and why?

6) Given the activities, which ones would you collapse together? Why? Are there other possible activities that would make sense to incorporate?

The professor wants us to use ABC accounting for these cost drivers.

Activity		Driver
Entering purchase orders		Number of Orders
Commissions		Sales Dollars with Medium Customers
Shipping Activities		Number of Shipments
Invoicing		Number of Invoices
Cost to make sles calls		Sales Dollars with Large Customers
Checking credit		Percent Accounts > 60 days
Samples, catalog info		Sales Dollars
Special handling charges		Management Estimate
Distribution management		Sales Dollars
Marketing, by customer type		Sales Dollars
Advertising/Promotion		Management Estimate
Marketing		Number of Units Sold
Adminitrative office support		Number of Units Sold
License fees		Sales Dollars with Medium Customers

TABLE 3 BLUE RIDGE MANUFACTURING Selling and Administrative Costs and Activities Costs Incurred in Each Function (Shipping, Sales, Marketing) Directly Assigned To: Total Assigned Total Shipping Sales Marketing Other Unassigned "$39,100* Administration Selling $170,000 155,000 $325,000 $ 17,000 15,500 $ 32,500 $ 37,400 117,800 $155.200 $20,400 9.300 $29,200 $56,100 12,400 $68,500 $130,900 155,000 $285,900 $39.100 65 Each function is used for the Following Activities Percentage of: Selling and Administrative Activities: Shipping Sales Marketing Other Entering Purchase Orders 55 10 Commissions 10 Shipping Activities 15 Invoicing 20 Cost to Make Sales Calls 30 10 Checking Credit 10 Samples, Catalog Info. 5 10 Special Handling Charges Distribution Management 10 10 Marketing, by Customer Type Advertising/Promotion 30 Marketing 15 50 5 Administrative Office Support 20 Licenses, Fees 5 100 100 100 100 * Note that $39,100 of the SG&A cost was not directly assigned. This amount represents the facility-sustaining activity cost: TABLE 3 BLUE RIDGE MANUFACTURING Selling and Administrative Costs and Activities Costs Incurred in Each Function (Shipping, Sales, Marketing) Directly Assigned To: Total Assigned Total Shipping Sales Marketing Other Unassigned "$39,100* Administration Selling $170,000 155,000 $325,000 $ 17,000 15,500 $ 32,500 $ 37,400 117,800 $155.200 $20,400 9.300 $29,200 $56,100 12,400 $68,500 $130,900 155,000 $285,900 $39.100 65 Each function is used for the Following Activities Percentage of: Selling and Administrative Activities: Shipping Sales Marketing Other Entering Purchase Orders 55 10 Commissions 10 Shipping Activities 15 Invoicing 20 Cost to Make Sales Calls 30 10 Checking Credit 10 Samples, Catalog Info. 5 10 Special Handling Charges Distribution Management 10 10 Marketing, by Customer Type Advertising/Promotion 30 Marketing 15 50 5 Administrative Office Support 20 Licenses, Fees 5 100 100 100 100 * Note that $39,100 of the SG&A cost was not directly assigned. This amount represents the facility-sustaining activity cost