Kramer Corporation is an office supplier dealing in a number of different products. It currently allocates its ordering and delivery costs to its residential and business customer groups on the basis of order value. However, the company has recently decided to implement activity-based costing starting in 20X4 to assign these costs to customers. Key data for 20X3 are as follows:

ActivityActivity

CostActivity BaseActivity

Volume

ResidentialActivity

Volume

BusinessTotal

Activity

VolumeSales (order value)$3,500,000$2,910,000$6,410,000Order processing$951,000No. of orders5,9302,3708,300Generating sales753,000No. of sales calls2,0603,8405,900Sales follow-up807,000No. of follow-ups102388490Processing change orders57,000No. of change orders198202400Delivery1,215,823No. of deliveries5,9504,55010,500

Total$3,783,823

Kramer has 2,060 residential customers and 510 business customers.

Required:1.Compute the cost per customer for residential and business customers for 20X3, using the current system of cost allocation.(Do not round intermediate calculations. Round "Cost per customer" to 2 decimal places and the rest to the nearest whole dollar amount.)

2.Assume that the 20X3 data will hold for 20X4. Compute the cost per customer for residential and business customers for 20X4 using the proposed system of cost allocation. In doing so, calculate the overhead allocation rate for each activity, and use these rates to assign costs to the two customer groups.(Round intermediate calculations and your answers to 2 decimal places.)