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Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Number of orders Units per order
Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Number of orders Units per order Sales returns: Number of returns Total units returned Jerry, Incorporated Kate Company 3 60 1,000 400 15 50 11 130 Number of sales calls Colleen sells its products at $190 per unit. The firm's gross margin ratio is 25%. Both Jerry and Kate pay their accounts promptly and no accounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30 months, the firm has determined the following activity costs: Activity Sales calls Order processing Deliveries Sales returns Sales salary Required: Cost Driver and Rate $600 per visit 270 per order 188 per order 210 per return and $4 per unit returned 95,000 per month 1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total cost for Colleen Company to service Jerry, Incorporated and Kate Company. 2. Compare the profitability of these two customers. Complete this question by entering your answers in the tabs below.
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