Figure Four, Inc. specializes in the distribution of pharmaceutical products. Figure Four buys from pharmaceutical companies and resells to each of three different markets:

a. General supermarket chains

b. Drug store chains

c. "Mom and Pop" single-store pharmacies

Flair Banks recently attended a seminar on activity-based costing and decided to consider using it in Figure Four. Flair meets with all the key managers and many staff members. People generally agree that there are five key activity areas in Figure Four:

Each customer purchase order consists of one or more line items. A line item represents a single product (such as Extra-Strength Tylenol tablets). Each store delivery entails the delivery of one or more cartons of products to a customer. Each product is delivered in one or more separate cartons. Figure Four staff stack cartons directly onto display shelves in a store. Currently, there is no charge for this service, and not all customers use Figure Four for this activity.

The November 2017 operating costs (other than the cost of goods sold) of Figure Four are $301,080. These operating costs are assigned to the five activity areas. The costs in each area and the amount of the cost of drivers units used in that area for November 2017 are as follows:

Required a. Compute the November 2017 per unit cost driver rate for each of the five activity areas. b. Compute the operating cost (other than the cost of goods sold) of each distribution market in November 2017 using the activity-based costing.

Activity Area 1. Customer purchase order processing 2. Line item ordering 3. Store delivery 4. Cartons shipped to stores 5. Shelf-stocking at customer stores Cost Driver Purchase orders by customers Line items per purchase order Store deliveries Cartons shipped to a store per delivery Hours of shelf stocking Total Costs in November 2017 Total Units of Cost Driver Used in November 2017 Activity Area 1. Customer purchase order processing $ 80,000 2. Line item ordering 63,840 3. Store delivery 71,000 4. Cartons shipped to stores 76,000 5. Shelf-stocking at customer stores 10,240 Total $301,080 2,000 orders 21,280 line items 1,420 store deliveries 76,000 cartons 640 hours Other data for August 2000 include the following: General Supermarket Chains 140 14 120 Drug Store "Mom and Chains Pop" Single Stores 360 1,500 12 10 300 1,000 Total number of orders Average number of line items per order Total number of store deliveries Average number of cartons shipped per store delivery Average number of hours of shelf- stocking per store delivery 300 80 16 3.0 0.6 0.1