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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 IT 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 IT 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 Non-JIT Distributors Distributors Sales orders 800 80 Sales calls 70 70 Service calls 350 175 Average order size 850 8,500 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 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) 900,000 525,000 Sales $78,750,000 X Allocation 2,625,000 2,625,000 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 $ 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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