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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
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: JIT Distributors Non-JIT Distributors Sales orders 700 Sales calls Service calls Average order size 6,500 Manufacturing cost/unit $125 $125 Customer costs: Processing sales orders $3,280,000 Selling goods 1,120,000 Servicing goods 1,050,000 $5,450,000 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) 455,000 455,000 Sales $ 68,250,000 $ 68,250,000 $ 2,725,000 Allocation $ 2,725,000 2. Conceptual Connection: Calculate the customer cost per distributor type using activity-based cost assignments. Round the interim calculations to the nearest dollar. JIT Non-JIT Ordering costs Selling costs 298,182 X 560,000 $ $ $ $ 2,981,817 X 560,000 700,000 4,241,817 * $ $ $ $ Service costs 350,000 1,208,182 x 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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