Cost Allocation at Amazon

• Values:

• Total Overhead Costs: $1,000,000
• Allocation Base: Number of Orders
• Orders Processed: 100,000
• Requirements:

0. Allocate overhead costs using the number of orders as the base.
1. Calculate the overhead cost per order for Amazon.
2. Discuss the challenges in cost allocation for e-commerce companies.
3. Recommend improvements in Amazon’s cost allocation methods.