Jorell, Inc., manufactures and distributes a variety of labelers. Annual production of labelers averages 375,000...
70.2K
Verified Solution
Link Copied!
Question
Accounting
Jorell, Inc., manufactures and distributes a variety of labelers. Annual production of labelers averages 375,000 units. A large chain store purchases about 30 percent of Jorell's production. Several thousand independent retail office supply stores purchase the other 70 percent. Jorell incurs the following costs of production per labeler:
| Direct materials | $9.25 |
| Direct labor | 2.40 |
| Overhead | 3.00 |
| Total | $14.65 |
Jorell has two salespeople assigned to the chain store account at a cost of $54,100 each per year. Delivery is made in 1,500 unit batches about three times a month at a delivery cost of $690 per batch. Eight salespeople service the remaining accounts. They call on the stores and incur salary and mileage expenses of approximately $39,700 each. Delivery costs vary from store to store, averaging $0.56 per unit.
Jorell charges the chain store $16.80 per labeler and the independent office supply stores $20.30 per labeler.
Required:
Is Jorell's pricing policy supported by cost differences in serving the two different classes of customer? Support your answer with relevant calculations. (Round unit costs to the nearest cent.) No, the cost differential of $____________does not justify the price differential of $3.50.
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.