Octoring Enabled: MGMTS500 - Midterm Exam - Friday 5 01:31:42 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: Activity Sales (order value) Order processing Generating sales. Sales follow-up Processing change orders Delivery Total Ordering and delivery costs applied Number of customers Cost per customer $ Activity Cost 966,000 755,000 816,000 64,000 1,245, 128 $3,846,128 Activity Cost Pool Residential Activity Base No. of orders No. of sales calls No. of follow-ups No. of change orders No. of deliveries Saved Activity Rate Business Activity Volume Total Activity Volume Residential Business $3,620,000 $2,940,000 $6,560,000 5,960 2,240 Kramer has 1,980 residential customers and 500 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.) Activity Volume 95 198 6,060 1,840 3,860 395 192 3,740 7,800 6,100 490 390 9,800 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.)

Kramer Orfice 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: Kramer has 1,980 residential customers and 500 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.)