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11. Nerrod Company sells its products at $780 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the
11. Nerrod Company sells its products at $780 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs:
Activity | Cost Driver and Rate | ||
Sales calls | $ | 540 | per visit |
Order processing | $ | 170 | per order |
Deliveries | $ | 65 | per order + $0.50 per mile |
Sales returns | $ | 80 | per return and $3.0 restocking per unit returned |
Nerrod Company has gathered the following data pertaining to activities it performed for two of its customers:
XBT | NINTO | |||
Number of orders | 24 | 2 | ||
Number of parts per order | 640 | 2,140 | ||
Sales returns: | ||||
Number of returns | 4 | 10 | ||
Number of units returned | 40 | 50 | ||
Number of sales calls | 11 | 7 | ||
Miles per delivery | 10 | 20 | ||
Shipping terms | FOB, Factory | FOB, Destination | ||
What is Nerrod's total sales-sustaining cost applicable to XBT as a customer?
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$0.
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$990.
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$4,190.
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$6,370.
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$6,490.
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