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Workshape Manufacturing has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders, and the non-JIT distributor tends to
Workshape Manufacturing has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders, and the non-JIT distributor tends to place larger, less frequent orders. Both types of distributors purchase the same product. The customer activities and costs for the previous quarter are as follows:
Activity | JIT distributors | Non-JIT distributors |
Sales Orders | 500 | 30 |
Sales Calls | 30 | 30 |
Service Calls | 200 | 90 |
Average Order Size | 90 | 1,400 |
Manufacturing Cost/Unit | $50 | $50 |
Customer Costs: | ||
Processing Sales Orders | $160,000 | |
Selling Goods | $155,000 | |
Servicing Goods | $195,000 | |
Total | $500,000 |
Calculate the total customer cost for the JIT distributors. (Note: Round the activity rates and activity costs to the nearest dollar.)
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