Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Jerry, Incorporated 3 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 Colleen sells its products at $180 per unit. The firm's gross margin ratio is 25%. 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 Required 2 Customer unit level costs: Sales returns 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. Customer batch level costs: Order processing Sales returns Delivery Complete this question by entering your answers in the tabs below. Customer sustaining costs: Total 1 68 11 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. Kate Company $700 per visit 210 per order 310 per order 288 per return and $3 per unit returned 92,000 per month S Jerry, Incorporated S S Kate Company 48 180 3 120 6 180 S Cost Driver and Rate 810 990 S 4,800 4.800
Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Jerry, Incorporated 3 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 Colleen sells its products at $180 per unit. The firm's gross margin ratio is 25%. 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 Required 2 Customer unit level costs: Sales returns 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. Customer batch level costs: Order processing Sales returns Delivery Complete this question by entering your answers in the tabs below. Customer sustaining costs: Total 1 68 11 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. Kate Company $700 per visit 210 per order 310 per order 288 per return and $3 per unit returned 92,000 per month S Jerry, Incorporated S S Kate Company 48 180 3 120 6 180 S Cost Driver and Rate 810 990 S 4,800 4.800
Chapter18: The Management Of Accounts Receivable And Inventories
Section: Chapter Questions
Problem 1P
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Question
Vinubhai
Transcribed Image Text:Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers.
Jerry,
Incorporated
3
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
Colleen sells its products at $180 per unit. The firm's gross margin ratio is 25%. 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 2
Customer unit level costs:
Sales returns
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.
Customer batch level costs:
Order processing
Sales returns
Delivery
Complete this question by entering your answers in the tabs below.
Customer sustaining costs:
Total
1
60
11.
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.
$700 per visit
210 per order
310 per order
200 per return and $3 per unit returned
92,000 per month
Jerry,
Incorporated
$
$
Kate
Company
48
180
$
3
120
Cost Driver and Rate
180 $
810
990 $
Kate Company
4,800
4,800
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