Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Strategy

Authors: Gerry Johnson, Kevan Scholes, Richard Whittington

2nd Edition

0273713108, 9780273713104

More Books

Students also viewed these Accounting questions