Question
Activity-Based Customer Costing Dormirbien Company produces mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are small, separately owned furniture stores and one
Activity-Based Customer Costing
Dormirbien Company produces mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are small, separately owned furniture stores and one is a retail chain. The retail chain buys 60% of the mattresses produced. The 19 smaller customers purchase mattresses in approximately equal quantities, where the orders are about the same size. Data concerning Dormirbien's customer activity are as follows:
Large RetailerSmaller RetailersUnits purchased36,00034,000Orders placed121,310Number of sales calls6294Manufacturing costs$14,400,000$9,600,000Order filling costs allocated*$484,800$323,200Sales force costs allocated*$240,000$160,000*Currently allocated on sales volume (units sold).Currently, customer-driven costs are assigned to customers based on units sold, a unit-level driver.
Required:
Assign costs to customers by using an ABC approach. Round your answers and all intermediate calculations to the nearest dollar.
Order filling rate$ per orderSelling call rate$ per sales callCost assignment:Large retailer$Smaller retailers$
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