Colleen Company has gathered the following data pertaining to activities it performed for two of its major
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Question:
Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers.
Jerry, Incorporated Kate Company
Number of orders
Units per order
Sales returns:
Number of returns
Total units returned
Number of sales calls
Colleen sells its products at $ per unit. The firms gross margin ratio is Both Jerry and Kate pay their accounts promptly and no accounts receivable is over days. After using business analytics software to carefully analyze the operating data for the past months, the firm has determined the following activity costs:
Activity Cost Driver and Rate
Sales calls $ per visit
Order processing per order
Deliveries per order
Sales returns per return and $ per unit returned
Sales salary per month
Required:
Using customers as the cost objects, classify the activity costs into cost categories unitlevel, batchlevel, etc. and compute the total cost for Colleen Company to service Jerry, Incorporated and Kate Company.
Compare the profitability of these two customers.
Related Book For
Cost Management A Strategic Emphasis
ISBN: 978-0078025532
6th edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins
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