96.Restaurant Supply Company developed the following information on indirect costs for assessing customer profitability.
|
Cost Pool |
Annual Cost |
Cost Driver |
Annual Driver Quantity |
Customer |
|
|
A |
B |
||||
|
Processing electronic orders |
$1,000,000 |
Number of orders |
500,000 |
500 |
0 |
|
Processing non-electronic orders |
$2,000,000 |
Number of orders |
400,000 |
0 |
1000 |
|
Picking orders |
$3,000,000 |
Number of different products ordered |
1,000,000 |
800 |
1800 |
|
Packaging orders |
$1,500,000 |
Number of items ordered |
50,000,000 |
1,000,000 |
1,000,000 |
|
Returns |
$3,000,000 |
Number of returns |
50,000 |
2 |
200 |
Customer A and Customer B each generated revenues in the last year of $600,000 and had direct costs associated with their orders of $450,000.
a. What is the cost per unit of the cost drive in each of the cost pools above?
b. Prepare a statement for each customer showing their customer profitability.
c.Why is customer B more profitable?
97.A company uses activity based pricing. The pricing structure is to charge customers the direct cost of the product they order with a markup of 30% on direct costs plus the cost of the services that are provided. The service costs are $8.00 per order, $12.00 for each product that is ordered, and $2.00 per pound for shipping.
Endless Industries makes 10 orders for goods with a direct cost of $10,000. They order 80 different products that weigh a total of 1,800 lbs. What is the total price paid by Endless?
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