Reference no: EM132840619

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                                       108,000                            72,000

Orders placed                                                  36                              3,600

Number of sales calls                                             18                             882

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

Order filling costs allocated                                 $1,455,127                    $970,085

Sales force costs allocated                                   $719,820                       $479,880

• Currently allocated on sales volume (units sold).
• Currently, customer-driven costs are assigned to customers based on units sold, a unit-level driver.

Required:

Problem 1: Assign costs to customers by using an ABC approach. Round your answers and all intermediate calculations to the nearest dollar.