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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-IT 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 JIT Non-JIT Distributors Distributors 1,200 120 70 70 350 175 550 5,500 $125 $125 Manufacturing cost/unit Customer costs: Processing sales orders $3,330,000 Selling goods 1,120,000 1,050,000 $5,500,000 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. JIT Non-JIT Sales (in units) 660,000 Sales 9,900,000 X 660,000 V 9,900,000 X Allocation 49,500,000 X 49,500,000 X Required: 1. Calculate the total revenues per distributor category, and assign the customer costs to each distributor type by using revenues a the allocation base. Selling price for one unit is $150. Round calculations to the nearest dollar. JIT 660,000 Non-JIT 660,000 Sales (in units) Sales 9,900,000 X 9,900,000 X Allocation 49,500,000 X 49,500,000 X 2. Conceptual Connection: Calculate the customer cost per distributor type using activity-based cost assignments. Round the interin calculations to the nearest dollar. JIT Non-JIT Ordering costs $ X Selling costs $ X Service costs $ X Total X X X For non JIT distributors by how much can the price be decreased without affecting customer profitability? Round your answer to the nearest cent. X per unit
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