Activity-Based Customer-Driven Costs

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	1,100		110
Sales calls	70		70
Service calls	350		175
Average order size	650		6,500
Manufacturing cost/unit	$125		$125
Customer costs:
Processing sales orders	$3,230,000
Selling goods	1,120,000
Servicing goods	1,050,000
Total	$5,400,000

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