Question

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-related 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 non-JIT distributors. (Note: Round the activity rates and activity costs to the nearest dollar.)

Answer 1

Answer:

Explanation:

Activity rates:

Processing Sales Orders = 160000/(500+30)  = 302

Selling Goods =155000/(30+30)  = 2583

Servicing Goods =195000/(200+90)  = 672

Non-JIT distributors:  

Processing Sales Orders =30*302  = 9060

Selling Goods =30*2583  = 77,490

Servicing Goods =90*672  = 60,480

Total customer cost = 9060+77490+60480 = 147,030