Reference no: EM13824971
Company produces precision components. Company has 11 customers, one accounts for 60 percent of th esales, with the remaining ten accounting for th rest of the sales. the ten smaller customers purchase components in roughly equal quantities. Orders placed by the smaller customers are about the same size. Data concerning the customers activity follow:
Large Customer Ten Small Customers
Units purchased 300,000 200,000
orders places 12 420
number of sales calls 20 230
manufacturing cost $800,000 $700,000
Order filling costs for company total $720,000, and sales-force costs are $600,000.
Required:
a) What are the total costs assigned to the large customer and to the ten small customers assuming that they allocate the order-filling and sales force costs to the large and small customers based on sales volume?
b) What are the total costs assigned to the large customers and to the ten small customers assuming that they allocate the order-filling and sales force costs to the customers using the activity-based costing approach?
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