Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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?

  • $0.

  • $990.

  • $4,190.

  • $6,370.

  • $6,490.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting Method And Meaning Teachers Guide

Authors: R.M.S. Wilson

2nd Edition

0412436205, 978-0412436208

More Books

Students also viewed these Accounting questions

Question

=+b. What is the value of r 2 ?

Answered: 1 week ago

Question

1. In what ways has flexible working revolutionised employment?

Answered: 1 week ago