Colleen Company has gathered the following data pertaining to acdivities it perf

Question

Colleen Company has gathered the following data pertaining to acdivities it performed for two of its majon Number of orders Units per order Sales returns Jerry Inc Kate Co 50 2,000310 Number of returns Total units returned Number of sales calls 180 60 12 Colleen sells its products at $200 per unit The firm's gross margin ratio is 25% Both Jerry and Kate pay their accounts promptly and no accounts recervable is over 30 days. After using business intelligence software to carefully analyze the operating data for the past 30 months, the firm has determined the following activity costs Activity Sales calls Order processing Deliveries Sales returns Sales salary Cost Driver and Rate S 600 per visit 240 per order 310 per order 300 per return and $5 per unit returned 88,000 per month Required: 1. Classify activity costs into cost categoies (unit, batch, etc.) and compute the total cost for Colleen Company to service Jerry Inc. and Kate Co Jerry Inc. Kate Co. Customer unit level costs s 1,440,000 $ 3,720,000 Customer batch level costs 600 2,400 15,500 1,800 7.200 Customer sustaining costs 1,448,730 3,739,TOO Total S 2,897.460$ 7,479,400 O Type here to search

Explanation / Answer

1) Calculation for Activity Costs ;-

2) Compare the Profitability :-

Particulars Jerry ($) Kate ($) Customer Unit - Level Cost :- Sales Returns (60*$5 , 180*$5) 300 900 Customer Batch Lavel Costs :- Order Processing (3*$240 , 50*$240) 720 12000 Sales Returns (1*$300 , 5*$300) 300 1500 Delivery (3*$310 , 50*$310) 930 15500 Customer Substaining Costs :- Sales Calls (12*$600 , 3*$600) 7200 1800 Total 9450 31700

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