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Question - Activity-Based Customer-Driven Costs - Suppose that Stillwater Designs has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders, and the non-JIT distributor tends to place larger, less frequent orders. Both types of distributors are buying the same product. Stillwater Designs provides the following information about customer-related activities and costs for the most recent quarter:
JIT Distributors
Non-JIT Distributors
Sales orders
900
90
Sales calls
70
Service calls
350
175
Average order size
650
6,500
Manufacturing cost/unit
$125
Customer costs:
Processing sales orders
$3,280,000
Selling goods
1,120,000
Servicing goods
1,050,000
Total
$5,450,000
Required -
1. Calculate the total revenues per distributor category, and assign the customer costs to each distributor type by using revenues as the allocation base. Selling price for one unit is $150. Round calculations to the nearest dollar.
2. Conceptual Connection: Calculate the customer cost per distributor type using activity-based cost assignments. Round the interim calculations to the nearest dollar.
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