How much would be allocated to its customers

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Question - Pharmax Distributors specializes in the distribution of pharmaceutical products at the retail level. Pharmax's customer base is comprised of three main retail groups: general supermarket chains, large drugstore chains, and small, single-store "Ma & Pa" pharmacies. To evaluate the relative profitability of each customer group, Pharmax plans to use an allocation system that recognizes the relative demands that these groups place on the company's resources. Parmax's chief accountant examined the firm's support costs and activities and collected the following data for a typical operating period:

Support Activity

Budgeted Cost

Total Cost Driver

Order processing

$80,000

2,120 customer orders

Line item processing

$57,000

23,710 line items

Store deliveries

$78,000

1,490 deliveries

Carton handling

$70,000

72,800 cartons shipped

She also gathered the following data for a typical operating period:

 

General Supermarket

Drugstore Chains

Ma & Pa

Customer orders

130

390

1,600

Line items

1,820

4,290

17,600

Deliveries

100

290

1,100

Cartons shipped

28,000

26,100

18,700

If Pharmax uses an activity-based costing system to allocate its overhead costs, how much would be allocated to its Ma & Pa customers?

Reference no: EM132224907

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