Question: Amazon.com operates e-commerce services using operating costing. In May 2031, the company incurs the following operating costs: Warehouse Rent: $25 million Fulfillment Labor: $35 million

Amazon.com operates e-commerce services using operating costing. In May 2031, the company incurs the following operating costs:

  • Warehouse Rent: $25 million
  • Fulfillment Labor: $35 million
  • Packaging Materials: $10 million
  • Shipping Costs: $20 million
  • Customer Service: $8 million
  • Selling Expenses: $15 million
  • Distribution Expenses: $12 million

Required:

  • Allocate operating costs to warehousing, fulfillment, and shipping operations.
  • Determine the cost per customer served assuming 50 million customers processed.
  • Analyze the cost structure and profitability of Amazon.com's e-commerce operations.
  • Discuss the role of cost allocation in managing operating costs.
  • Prepare an operating costing statement for Amazon.com, Inc.

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