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Activity-Based Customer Costing Limpio Company produces dishwashers for 36 retail outlets. Of the 36 retail outlets, 34 are small, separately owned appliance stores and two
Activity-Based Customer Costing Limpio Company produces dishwashers for 36 retail outlets. Of the 36 retail outlets, 34 are small, separately owned appliance stores and two are arge retail chains. The two large retailers buy 80% of the dishwashers produced. The 34 smaller customers purchase dishwashers in approximately equal quantities, where the orders are about the same size. Data concerning Limpio's customer activity are as follows: Large Retailer Smaller Retailers 60,000 Units purchased 15,000 1,500 orders placed 20 816 Number of sales calls $4,500,000 $1,125,000 Manufacturing costs $161,600 Order filling costs allocated* $646,400 $80,000 Sales force costs allocated $320,000 *Currently allocated on sales volume (units sold)
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