JIT Distributors Non-JIT Distributors 120 Sales orders 1,200 Sales calls 70 70 350 175 850 8,500 $125 $125 Service calls Average order size Manufacturing cost/unit Customer costs: Processing sales orders Selling goods $3,130,000 1,120,000 Servicing goods 1,050,000 Total $5,300,000 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) Sales 1,020,000 $ 153,000,000 2,650,000 1,020,000 $ 153,000,000 2,650,000 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 $ s Ordering costs Selling costs $ Service costs $ $ Total s 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 3. Assume that the JIT distributors are simply imposing the frequent orders on Stillwater Designs. No formal discussion has taken place between JIT 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 Stillwater Designs' management? It sounds like the IT buyers are switching their inventory carrying costs to Stillwater Designs without any significant benefit to Stillwater Designs. Stillwater 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 likely occurring inside the plant. Stillwater Designs should also immediately initiate discussions with its JIT customers to begin negotiations for achieving some of the benefits that a JIT supplier should have, such as contracts. The benefits of contracting may offset most or all of the increased costs from the additional demands made on other activities