Question
Sleepeze Company produces mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are small, separately owned furniture stores and one is a retail
Sleepeze Company produces mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are small, separately owned furniture stores and one is a retail chain. The retail chain buys 60% of the mattresses produced. The 19 smaller customers purchase mattresses in approximately equal quantities, where the orders are about the same size. Data concerning Sleepeze's customer activity are as follows:
Large Retailer Smaller Retailers
Units purchased 108,000 72,000
Orders placed 36 3,600
Number of sales calls 18 882
Manufacturing costs $43,200,000 $28,800,000
Order filling costs allocated* $1,636,200 $1,090,800
Sales force costs allocated* $864,000 $576,000
*Currently allocated on sales volume (units sold).
Currently, customer-driven costs are assigned to customers based on units sold, a unit-level driver.
Required:
Assign costs to customers by using an ABC approach. Round your answers and all intermediate calculations to the nearest dollar.
Order filling rate $
per order
Selling call rate $
per sales call
Cost assignment:
Large retailer $
Smaller retailers $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started