Activity-Based Customer Costing

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:

Large Retailer Smaller Retailers

Units purchased 108,000 72,000

Orders placed 36 3600

Number of sales calls 18 882

Manufacturing costs $43,200,000 $28,800,000

Order filling costs allocated* $1,308,960 $872,640

Sales force costs allocated* $783,000 $522,000

*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 order

Selling call rate ?????? per sales call

Cost assignment:

Large retailer ???????

Smaller retailers ????????