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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: JIT Distributors Non-JIT Distributors Sales orders 700 70 Sales calls 70 70 Service calls 350 175 Average order size 750 7,500 Manufacturing cost/unit $125 $125 Customer costs: Processing sales orders $3,080,000 Selling goods 1,120,000 Servicing goods 1,050,000 Total $5,250,000
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