Activity-Based Customer-Driven Costs Suppose that Stilwater Designs has two classes of distributors: HIT 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. Stilwater Designs provides the following information about customer-related activities and costs for the most recent quarter JIT Distributors Non-JIT Distributors Sales orders H00 80 Sales calls 70 70 Service calls 350 125 550 5,500 5125 $125 Average order se Manufacturing cost/unit Customer costs: Processing sales orders $3,330,000 Selling goods 1,120,000 Servicing goods 1,050,000 Total $5,500,000 Required: 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) Sales Allocation 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 nearestent, per unit 3. Assume that the IT distributors are simply imposing the frequent orders on Stilwater Designs. No format discussion has taken place between IT customers and Stillwater Designs regarding the supply of goods on a JIT basis. The sales pattern has evolved over time. As an independent consultant, what would you suggest to Sullwater Designs' management? It sounds like the or buyers are switching their inventory carrying costs to Stillwater Designs without any significant benefit to Stilwater Desiges, Stilwater Designs needs to prices to reflect the additional demands on customer support activities. Furthermore, additional may be needed to reflect the increased number of setups, purchases, and so on, that are cly occurring inside the plant Stillwater Designs shouer Initiate discussions with price increases its IT customers to begin negotiations for achieving some of the benefits that a IT supplier should have, such as The benefits of contracting may offset most or all of the increased costs from the additional demands made on other active price decreases