Question
Brent Company's cost system assigns MSDA expenses to customers using a rate of 33% of sales revenue. The new CFO has discovered that Brent's customers
Brent Company's cost system assigns MSDA expenses to customers using a rate of 33% of sales revenue. The new CFO has discovered that Brent's customers differ greatly in their ordering patterns and interaction with Brent's sales force. Because the CFO believes Brent's cost system does not accurately assign MSDA expenses to customers, he developed an ABC system and gathered the following information.
| Austin | Brooke | Totals | |
| Sales | $ 860,000 | $ 700,000 | $ 1,560,000 |
| Cost of Goods Sold | 440,000 | 310,000 | 750,000 |
| Sales Representative Travel 1 | 8,000 | 84,000 | 92,000 |
| Service Customers | 30,000 | 220,000 | 250,000 |
| Handle Customer Orders | 2,000 | 24,000 | 26,000 |
| Ship to Customers | 48,000 | 144,000 | 192,000 |
Using the activity-based costing information provided, determine the operating profit associated with Austin and with Brooke.
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Clinical Audit In Physiotherapy From Theory Into Practice
Authors: Sue Barnard MSc MCSP, Gayle Hartigan
1st Edition
075063779X, 978-0750637794
