Windows of the World (WoW) sells and delivers new windows to construction sites in the Midwest....

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Windows of the World (WoW) sells and delivers new windows to construction sites in the Midwest. Each window is sold for $130. In addition, WoW charges a flat fee of $5 per window for shipping and handling. Some customers are happy with the arrangement while others are leaving. The owner of WoW, Jack, decides to take a closer look at the situation and hires a consultant to do the job. The consultant compiles the data on shipping and handling for the second quarter and prepares the following table: Activity Activity Cost Cost Driver Volume 1,200 orders Order entry Cost Driver Number of orders Number of windows $24,000 Packaging 22,500 15,000 windows Delivery 30,800 Number of deliveries 1,400 deliveries General administration 39,000 Order value $1,950,000 Jack also provides activity data from two representative customers (Ray and Jerry), one stays and one is leaving. Ray Jerry Number of orders placed 45 14 Number of windows ordered 2,000 2,000 Number of deliveries made 55 14 Order value $260,000 $260,000 Required: 1. Determine the cost driver rates associated with shipping and handling activities. 2. Determine customer cost for Ray and Jerry. 3. Recommend changes to WoW's shipping and handling pricing policy. Windows of the World (WoW) sells and delivers new windows to construction sites in the Midwest. Each window is sold for $130. In addition, WoW charges a flat fee of $5 per window for shipping and handling. Some customers are happy with the arrangement while others are leaving. The owner of WoW, Jack, decides to take a closer look at the situation and hires a consultant to do the job. The consultant compiles the data on shipping and handling for the second quarter and prepares the following table: Activity Activity Cost Cost Driver Volume 1,200 orders Order entry Cost Driver Number of orders Number of windows $24,000 Packaging 22,500 15,000 windows Delivery 30,800 Number of deliveries 1,400 deliveries General administration 39,000 Order value $1,950,000 Jack also provides activity data from two representative customers (Ray and Jerry), one stays and one is leaving. Ray Jerry Number of orders placed 45 14 Number of windows ordered 2,000 2,000 Number of deliveries made 55 14 Order value $260,000 $260,000 Required: 1. Determine the cost driver rates associated with shipping and handling activities. 2. Determine customer cost for Ray and Jerry. 3. Recommend changes to WoW's shipping and handling pricing policy.

Answer rating: 100% (QA)

1 Shipping and Handling costs include Packaging and Delvery costs in this case So the cost driver... View the full answer