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Taylors Cheesecakes supplies cheesecakes to three large supermarket chains. Management has become concerned about the rising costs associated with the processing and dispatch of
Taylors Cheesecakes supplies cheesecakes to three large supermarket chains. Management has become concerned about the rising costs associated with the processing and dispatch of orders. An activity analysis of the indirect costs identified the following customer-related costs: Customer use of cost driver Activity cost pool Cost driver Est. indirect costs Exp. Use of cost driver 1 2 3 Orders No. orders $226,000 366 175 113 78 processing Returns No. returns $82,000 98 19 59 20 20 processing Delivery No. deliveries $120,000 804 333 215 256 Rush orders No. rush $51,000 46 9 25 12 orders Sales visits No. visits $22,000 75 17 35 25 25 Sales are always marked up 40% on cost. The sales mix for the three customers in the period of investigation is as follows: Customer 1 - $548,000; Customer 2 - $410,000; Customer 3 - $525,000. Compute the highest contribution margin for the three customers and enter the amount below:
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