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Kramer Office Supplies offers a number of different products to its customers. It currently allocates its ordering and residential and business customer groups on the
Kramer Office Supplies offers a number of different products to its customers. It currently allocates its ordering and residential and business customer groups on the basis of order value. However, the company has recently decided activity-based costing starting in 2022 to assign these costs to customers. Key data for 2021 are as follows: Activity Cost Activity Base Activity Sales (order value) Order processing Generating sales Sales follow-up Processing change orders Delivery Total $ 956,000 759,000 808,000 56,000 1,270,780 $ 3,849,780 11 Activity Activity Tot. Volume Volume Activ Residential Business Volu $ 3,650,000 $ 2,950,000 $ 6,600 6,070 2,230 8 1,980 3,920 5, 100 390 194 216 6,080 4,320 No. of orders No. of sales calls No. of follow-ups No. of change orders No. of deliveries 10, Kramer has 2,040 residential customers and 490 business customers. Required: 1. Compute the cost per customer for residential and business customers for 2021, using the current system of cost allo round intermediate calculations. Round "Cost per customer" to 2 decimal places and the rest to the nearest whole Business Ordering and delivery costs applied Number of customers Residential $ 2,129,045 $ 2,040 $ 1,043.65$ 1,720,735 490 Cost per customer 3,511.70 2. Assume that the 2021 data will hold for 2022. Compute the cost per customer for residential and business customers fom using the proposed system of cost allocation. In doing so, calculate the overhead allocation rate for each activity, and use ti to assign costs to the two customer groups. (Round your intermediate calculations and final answers to 2 decimal places 0:42:52 $ Activity Cost Pool Order processing Getting sales Sales follow-up Processing change orders Delivery Activity Rate 115.18 per order 128.64 per sales call 1,648.97 per follow-up 136.59 per change order 122.19 per delivery h Residential Business Ordering and delivery costs applied Number of customers Cost per customer Mc Graw Hill
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