1. Activity-Based Customer Costing
2. Sleepeze 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 Sleepeze's customer activity are as follows:
3. Large RetailerSmaller Retailers Units purchased 108,00072,000Orders placed 363,600Number of sales calls 18882Manufacturing costs$43,200,000$28,800,000Order filling costs allocated*$1,455,127$970,085Sales force costs allocated $719,820$479,880*Currently allocated on sales volume (units sold).
4. Currently, customer-driven costs are assigned to customers based on units sold, a unit-level driver.
5. Required:
6. Assign costs to customers by using an ABC approach. Round your answers and all intermediate calculations to the nearest dollar.
7. Order filling rate
8. per orderSelling call rate
9. per sales callCost assignment:Large retailer
10. Smaller retailers