Activity-Based Customer-Driven Costs Suppose that Stillwater Designs has two classes of distributors: JIT distributors and non-JIT...

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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, 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: Non-JIT JIT Distributors Distributors Sales orders 900 90 Sales calls 70 70 Service calls 350 175 Average order size 550 5,500 13 Manufacturing cost/unit $125 $125 Customer costs: Processing sales orders $3,530,000 Selling goods 1,120,000 1,050,000 Servicing goods Total $5,700,000 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: Non-JIT JIT Distributors Distributors Sales orders 900 90 Sales calls 70 70 Service calls 350 175 Average order size 550 5,500 13 Manufacturing cost/unit $125 $125 Customer costs: Processing sales orders $3,530,000 Selling goods 1,120,000 1,050,000 Servicing goods Total $5,700,000