Reference no: EM13613144

Cortez Corporation has analyzed their customer and order handling data for the past year and has determined the following costs: Order processing cost per order $ 6 Additional costs if order must be expedited (Rushed) $ 9 Customer technical support calls (Per call) $ 7 Relationship management costs (Per customer per year) $1,900 In addition to these costs, product costs amount to 80 percent of sales. In the prior year, Cortez had the following experience with one of its customers, Green Company: Sales $50,000 Number of orders 170 Percent of orders marked rush 80 Calls to technical support 90 For the coming year, Cortez Corporation has told Green Company that it will be switched to an activity-based pricing system or it will be dropped as a customer. In addition to regular prices, Green will be required to pay: Order processing per order $12 Additional handling costs if order marked rush per order $20 Technical support calls per call $22

How much is the additional revenue to be charged to the Green Company account if activity is the same as in the prior year? $11,360 $8,640 $6,740 $1,360