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 Retailer 36,000 12 Units purchased Orders placed Number of sales calls Manufacturing costs Order filling costs allocated Sales force costs allocated* Smaller Retailers 24,000 1,200 294 9,600,000 $323,200 $160,000 $14,400,000 $484,800 $240,000 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 activity rates to at least three decimals and round activity costs to the nearest dollar Order filling rate Selling call rate Cost assignment Large retailer Smaller retailers per order per sales call Activity-Based Supplier Costing LissenPhones uses Alpha Electronics and La Paz Company to buy two electronic components used in the manufacture of its cell phones: Component 125 and Component 30Y Consider two activities: testing and reordering components. After the two components are inserted, testing is done to ensure that the two components in the phones are working properly. Reordering occurs because one or both of the components have failed the test and it is necessary to replenish component inventories. Activity cost information and other data needed for supplier costing are as follows: I. Activity Costs Caused by Suppliers (testing failures and reordering as a result) Activity Testing components Reordering components II. Supplier Data Costs 1,500,000 375,000 Unit purchase price Units purchased Failed tests Number of reorders Required Determine the cost of each supplier by using ABC. Round unit costs to two decimal places. 125X $10 150,000 1,500 75 Alpha Electronics 30Y $26 75,000 975 50 125X $12 18,750 13 La Paz Company 30Y $28 18,750 12 0 Alpha Electronics La Paz Company 125X unit cost 30Y unit cost Nonvalue-Added Costs Boothe Inc. has the following two activities: (1) Retesting reworked products, cost: $480,000. The retesting cost of the most efficient competitor is $150,000. (2) Welding subassemblies, cost: $900,000 (45,000 welding hours). A benchmarking study reveals that the most efficient level for Boothe would use 36,000 welding hours and entail a cost of $720,000 Required: Determine the nonvalue-added cost of each activity Retesting Welding Nonvalue-added cost