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Activity-Based Customer-Driven Costs Suppose that Stillwater Designs has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders,
Activity-Based Customer-Driven Costs Suppose that Stillwater Designs has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders, and the non-JIT distributor tends to place larger, less frequent orders. Both types of distributors are buying the same product. Stillwater Designs provides the following information about customer-related activities and costs for the most recent quarter: Sales orders Sales calls Service calls Average order size Distributors Non-IT Distributors 1,100 110 70 70 350 175 650 $125 6,500 $125 Manufacturing cost/unit Customer costs: Processing sales orders $3,480,000 Selling goods 1,120,000 1,050,000 $5,650,000 Servicing goods Total Required: 1. Calculate the total revenues per distributor category, and assign the customer costs to each distributor type by using revenues as the allocation base. Selling price for one unit is $150. Round calculations to the nearest dollar. Sales (in units) JIT Non-JIT Sales Allocation 2. Conceptual Connection: Calculate the customer cost per distributor type using activity-based cost assignments. Round the interim calculations to the nearest dollar. JIT AF Non-JIT Ordering costs Selling costs Service costs Total For non JIT distributors by how much can the price be decreased without affecting customer profitability? Round your answer to the nearest cent. per unit
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