Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Jerry, Incorporated 6 3,000 Number of orders Units per order Sales returns: Number of returns Total units returned Number of sales calls Activity Sales calls Order processing Deliveries Sales returns Sales salary 4 60 8 Colleen sells its products at $260 per unit. The firm's gross margin ratio is 20%. Both Jerry and Kate pay their accounts promptly and no accounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30 months, the firm has determined the following activity costs: Required 1 Kate Company 30 130 $800 per visit 260 per order Required 2 6 190 3 Cost Driver and Rate Required: 1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total cost for Colleen Company to service Jerry, Incorporated and Kate Company. 2. Compare the profitability of these two customers. 390 per order 240 per return and $4 per unit returned 90,000 per month Complete this question by entering your answers in the tabs below. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total cost for Colleen Company to service Jerry, Incorporated and Kate Company.
Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Jerry, Incorporated 6 3,000 Number of orders Units per order Sales returns: Number of returns Total units returned Number of sales calls Activity Sales calls Order processing Deliveries Sales returns Sales salary 4 60 8 Colleen sells its products at $260 per unit. The firm's gross margin ratio is 20%. Both Jerry and Kate pay their accounts promptly and no accounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30 months, the firm has determined the following activity costs: Required 1 Kate Company 30 130 $800 per visit 260 per order Required 2 6 190 3 Cost Driver and Rate Required: 1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total cost for Colleen Company to service Jerry, Incorporated and Kate Company. 2. Compare the profitability of these two customers. 390 per order 240 per return and $4 per unit returned 90,000 per month Complete this question by entering your answers in the tabs below. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total cost for Colleen Company to service Jerry, Incorporated and Kate Company.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter5: Activity-based Costing And Management
Section: Chapter Questions
Problem 57P: Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account...
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Transcribed Image Text:Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers.
Number of orders
Units per order
Sales returns:
Number of returns
Total units returned
Number of sales calls
Activity
Sales calls
Order processing
Deliveries
Sales returns
Sales salary
Jerry,
Incorporated
6
3,000
4
60
8
Colleen sells its products at $260 per unit. The firm's gross margin ratio is 20%. Both Jerry and Kate pay their accounts promptly and
no accounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30
months, the firm has determined the following activity costs:
Kate
Company
30
130
Required 1 Required 2
6
190
3
Cost Driver and Rate
$800 per visit
260 per order
390 per order
240 per return and $4 per unit returned
90,000 per month
Required:
1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total
cost for Colleen Company to service Jerry, Incorporated and Kate Company.
2. Compare the profitability of these two customers.
Complete this question by entering your answers in the tabs below.
Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute
the total cost for Colleen Company to service Jerry, Incorporated and Kate Company.
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