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Nerrod Company sells its products at $740 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following

Nerrod Company sells its products at $740 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs:

Activity Cost Driver and Rate
Sales calls $ 520 per visit
Order processing $ 160 per order
Deliveries $ 55 per order + $0.50 per mile
Sales returns $ 70 per return and $3.00 restocking per unit returned

Nerrod Company has gathered the following data pertaining to activities it performed for two of its customers:

XBT NINTO
Number of orders 22 2
Number of parts per order 620 2,120
Sales returns:
Number of returns 4 10
Number of units returned 40 50
Number of sales calls 9 5
Miles per delivery 10 20
Shipping terms FOB, Factory FOB, Destination

What is Nerrod's total customer batch-level cost applicable to Ninto?

  • $1,150.

  • $1,140.

  • $2,520.

  • $2,640.

  • $6,520.

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