Question
Mustaine Manufacturing has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders and the non-JIT distributor tends to
Mustaine Manufacturing has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders and the non-JIT distributor tends to place larger, less frequent orders. Both types of distributors purchase the same product. The customer activities and costs for the previous quarter are found below: JIT Non-JIT Sales Orders 300 20 Sales Calls 25 25 Service Calls 150 75 Average Order Size 100 1,000 Manufacturing cost/unit $50 $50 Customer Costs: Processing Sales Orders $200,000 Selling Goods $120,000 Servicing Goods $150,000 Total $470,000 Refer to Figure 7-2. Calculate the activity rate for processing sales orders. $625 per order $889 per order $182 per order $667 per order $1.47 per order
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