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What is Smith's total sales-sustaining cost applicable to XBT as a customer?

What is Smith's total sales-sustaining cost applicable to XBT as a customer?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Smith Company sells its products at $500 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs: Activity Sales calls Cost Driver and Rate $ 400 per visit Order processing Deliveries $ 100 per order Sales returns $ 50 per order + $0.50 per mile $ 60 per return and $3 restocking per unit returned Smith Company has gathered the following data pertaining to activities it performed for two of its customers: Number of orders Number of parts per order Sales returns: Number of returns Number of units returned (per return) XBT 10 500 NINTO 2 2,000 4 10 40 50 6 10 10 20 FOB, Factory FOB, Destination Number of sales calls Miles per delivery Shipping terms What is Smith's total sales-sustaining cost applicable to XBT as a customer? Multiple Choice $4,120. $920. ○ $6,300. ○ $6,420. о $0.
Transcribed Image Text:Smith Company sells its products at $500 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs: Activity Sales calls Cost Driver and Rate $ 400 per visit Order processing Deliveries $ 100 per order Sales returns $ 50 per order + $0.50 per mile $ 60 per return and $3 restocking per unit returned Smith Company has gathered the following data pertaining to activities it performed for two of its customers: Number of orders Number of parts per order Sales returns: Number of returns Number of units returned (per return) XBT 10 500 NINTO 2 2,000 4 10 40 50 6 10 10 20 FOB, Factory FOB, Destination Number of sales calls Miles per delivery Shipping terms What is Smith's total sales-sustaining cost applicable to XBT as a customer? Multiple Choice $4,120. $920. ○ $6,300. ○ $6,420. о $0.
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