Carlton Products Company has analyzed the indirect costs associated with servici
ID: 2688464 • Letter: C
Question
Carlton Products Company has analyzed the indirect costs associated with servicing its various customers in order to assess customer profitability. Results appear below: Cost Pool Annual Cost Cost Driver Annual Driver Quantity Processing electronic orders $1,000,000 Number of orders 500,000 Processing non-electronic orders $2,000,000 Number of orders 400,000 Picking orders $3,000,000 Number of different products ordered 800,000 Packaging orders $1,500,000 Number of items ordered 50,000,000 Returns $2,000,000 Number of returns 50,000 If all costs were assigned to customers based on the number of items ordered, what would be the cost per item ordered?Explanation / Answer
I am not sure, please double check:
Cost per item = Total costs/Total items
= (1000000 + 2000000 + 3000000 + 1500000 + 2000000)/50000000
= $0.19