What the elements of customer profitability system including the activity cost pools and activity cost drivers, including the activity cost driver rates
F) WIN(E) 7/M) 8(W) 589(H) Aventi Bags Case.pdf x 7 79 59.1% . . . ACC/ACF2200 Introduction to Management Accounting 2019-$2 Assignment Aventis Bags' customers were billed based on invoices which were raised for customer orders processed. Billing costs made up the remaining customer related activity costs that Jake had identified as part of his analysis. He also identified a number of activity cost drivers to use as part of the analysis. Table 2 summarizes these activity cost driver amounts for 2019. Table 2: Activity Cost Driver Amounts for 2019 Activity Cost Driver MDS SDS SC MR MC SR No. of Orders 243 162 405 243 324 243 No. of Special Orders 184 161 207 184 207 207 No. of Contacts 221 130 286 169 221 273 No. of Sales Visits 110 88 121 88 77 66 No. of Invoices 288 252 324 270 270 396 No. of Cartons Packaged 182 182 234 208 208 286 No. of Deliveries 108 153 126 162 171 180 e TALKE (F) () 57/M) 8() 584(H) 57 Aventi Bags Case.pdf x 6 /9 59.1% . . . In addition to the sales visits, customers could contact the sales staff for sales related issues, for example, to extend/vary credit terms/enquire whether a range bags could be bought on consignment, etc. Tending to sales related issues involved sales related phone calls and emails. Jake determined that the cost of attending to sales related issues totalled $29,900. Packaging and handling costs accounted for $18,200 of customer related activity costs. Essentially, products ordered by Aventis Bags' customers would be packaged and delivered in cartons. Each delivery to a customer, would consist of at least one carton. In some instances a carton could contain more than one standard or special order from a customer. The number of orders packed in a carton depended largely on, whether the order was a standard (receive within 7 days) or an urgent order (receive within 1 day) and to some extent on the size of the order. For example, smaller non-urgent orders meant that fewer containers were delivered to the customer over the year and vise-versa if a customer placed larger non-urgent orders. If an order was urgent, then there would be one carton packaged for each urgent order and delivered straight away, hence this could increase the number of containers delivered to a customer. Urgent orders could also increase delivery expenses as these tended to increase the number of deliveries to a customer. Delivery expenses were determined to be $20,700. Semester 2, 2019 ACC/ACF2200 Introduction to Management Accounting 2019-$2 Assignment Aventis Bans' customers were billed based on invoices which were raised for eE 6 1 9 59.1% . . . In addition to the above, Jake discovered there were different customer ordering patterns that took place. Many of Aventis Bags' customers (mainly retailers) would usually order regular and large sized bags to keep stock on hand to sell and would re-order once the stock decreased, however in many instances some customers (such as corporate Semester 2, 2019 ACC/ACF2200 Introduction to Management Accounting 2019-$2 Assignment customers) would not keep stock of bags would order bags as needed (i.e. for new K executives). All in all he found that some customers had fewer smaller order sizes and ordered less frequently when compared to the other customers. Aventis Bags' sales staff would visit customers at their premises and showcase the latest products available in addition to attending to other sales related issues whilst there. Further, if requested by the customer, sales staff would also do displays to showcase the latest products. Jake determined that sales visits to customers accounted for $95,150 of the total customer related activity costs. In addition to the sales visits, customers could contact the sales staff for sales related e SAI2(F) (0) Aventi Bags Case.pdf x 5 19 59.1% .. . Jake identified a number of customer related activity costs which totalled $312,350. These included: processing standard orders and special orders, contacts with sales staff, sales visits, billing of customers, packaging and handling, and delivery to customers. Processing standard orders involved manual computer entry of customer details if a customer telephoned the order through. Otherwise if the order had been emailed this would then be logged onto the system by an administration staff member. These orders involved straightforward ordering of existing products without these being customised in any way. Jake determined the cost of processing these orders to be $48,600. Processing special orders accounted for $36,800 of total customer related activity costs identified. The work involved here was similar to processing standard orders above. However, as these orders were for bags to be customised in some way, more detail from the customer was required when recording these. For example, a customer may order a batch of regular leather bags with a company emblem to be put on the bags with/without special trimming. In addition to the above, Jake discovered there were different customer ordering patterns that took place. Many of Aventis Bags' customers (mainly retailers) would usually order regular and large sized bags to keep stock on hand to sell and would re-order once the stock decreased, however in many instances some customers (such as corporate e TAL
