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	1,200		120
Sales calls	70		70
Service calls	350		175
Average order size	650		6,500
Manufacturing cost/unit	$125		$125
Customer costs:
Processing sales orders	$3,580,000
Selling goods	1,120,000
Servicing goods	1,050,000
Total	$5,750,000

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

Activity-Based Customer Driver Costa Suppose that water Designs has two desses of our IT dibutors and one or The IT dibimall.freetores de tanda tallrocessor distributors are buying the same product. Des provides the following information about cute active in costs for the most recent quat Non- Distributors Distributors Soles des 1.200 12 70 350 115 650 $18 5325 Services Average oder Manchuring Customer costs Precious Sing woode Serviding we Total 33,500,000 1.170.000 1,050,000 55.750.000 Required: 1. Calculate the leverer dette and the customers who believes the IT Non Sale Al 2. CConnect Calculate the cuttertype income and in canto the do TIT Order