Question: APL Internet Services has analyzed its customer and order handling data for the past year and has determined the following costs: Order processing cost per
APL Internet Services has analyzed its customer and order handling data for the past year and has determined the following costs: Order processing cost per order $ 4 Customer tech support calls (per call) 7 Additional costs if tech support is after hours 12 Relationship management costs (per customer per year) $950 In addition to these costs, product costs amount to 80% of sales. In the prior year, APL had the following experience with Tapper Recreation, one of its customers: Sales $9,400 Number of orders 42 Calls to tech support 62 Percent of tech support calls after hours 40% For the coming year, APL has told Tapper Recreation that it will be switched to an activity-based pricing system. In addition to regular prices, Tapper will be required to pay: Order processing (per order) $ 7 Customer tech support calls (per call) 15 Additional costs if a tech support call is after hours 28 Calculate the total revenue to be billed to Tapper Recreation if activity is the same as in the prior year.
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