Question Content Area

Activity$-$Based Customer Costing

Sleepeze Company produces mattresses for $20$ retail outlets. Of the $20$ retail outlets, $19$ are small, separately owned furniture stores and one is a retail chain. The retail chain buys $60\%$ of the mattresses produced. The $19$ smaller customers purchase mattresses in approximately equal quantities, where the orders are about the same size. Data concerning Sleepeze$$s customer activity are as follows:

Large Retailer Smaller Retailers

Units purchased $108,00072,000$

Orders placed $363,600$

Number of sales calls $18882$

Manufacturing costs $$43,200,000$ $$28,800,000$

Order filling costs allocated$*$ $$1,690,740$ $$1,127,160$

Sales force costs allocated$*$ $$864,000$ $$576,000$

$*$Currently allocated on sales volume $($units sold$).$

Currently, customer$-$driven costs are assigned to customers based on units sold, a unit$-$level driver.

Required:

Assign costs to customers by using an ABC approach. Round your answers and all intermediate calculations to the nearest dollar.

Order filling rate $fill in the blank $1$

per order

Selling call rate $fill in the blank $2$

per sales call

Cost assignment:

Large retailer $fill in the blank $3$

Smaller retailers $fill in the blank $4$