=+Because salespeople are paid $25 per order, they break up large orders into multiple smaller orders. This practice reduces the actual order-taking cost by $16 per smaller order (from $30 per order to $14 per order) because the smaller orders are all written at the same time. This lower cost rate is not included in budgeted rates because salespeople create smaller orders without telling management or the accounting department. All other actual costs are the same as budgeted costs.

Information about Orion Ltd’s clients follows:

IHoS SRU SM SC GS Smart Total number of units purchased 250 550 320 130 450 1200 Number of actual orders 3 15 3 4 5 15 Number of written orders 6 15* 8 7 20 30 Total number of kilometres driven to deliver all products 420 620 470 280 806 900 Total number of units returned 20 35 0 0 40 60 Number of returned shipments 2 1 0 0 2 6 Number of expedited deliveries 0 6 0 0 2 5

*Because SRU places 15 separate orders, its order costs are $30 per order. All other orders are multiple smaller orders and so have actual order costs of $14.

Required 1 Classify each of the customer-level operating costs according to the customer-cost hierarchy.