Kramer Office Supplies offers a number of different products to its customers. 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 2022 to assign these costs to customers. Key data for 2021 are as follows:

ActivityActivity

CostActivity BaseActivity

Volume

ResidentialActivity

Volume

BusinessTotal

Activity

VolumeSales (order value)$3,580,000$2,930,000$6,510,000Order processing$954,000No. of orders6,0102,2908,300Generating sales759,000No. of sales calls1,7004,1005,800Sales follow-up819,000No. of follow-ups102408510Processing change orders58,000No. of change orders190220410Delivery1,272,383No. of deliveries5,9604,44010,400Total$3,862,383

Kramer has 1,990 residential customers and 510 business customers.

Required:

1.Compute the cost per customer for residential and business customers for 2021, 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 2021 data will hold for 2022. Compute the cost per customer for residential and business customers for 2022 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 your intermediate calculations and final answers to 2 decimal places.)

3.

This part of the question is not part of your Connect assignment.