Sleepeze Company produces mattresses for 20 retail outlets. Of the 20 retail outlets, 19 are small,...

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Accounting

Sleepeze Company produces mattresses for 20 retail outlets. Ofthe 20 retail outlets, 19 are small, separately owned furniturestores and one is a retail chain. The retail chain buys 60% of themattresses produced. The 19 smaller customers purchase mattressesin approximately equal quantities, where the orders are about thesame size. Data concerning Sleepeze’s customer activity are asfollows:
Large Retailer Smaller Retailers
Units purchased 108,000 72,000
Orders placed 36 3,600
Number of sales calls 18 882
Manufacturing costs $43,200,000 $28,800,000
Order filling costs allocated* $1,527,120 $1,018,080
Sales force costs allocated* $864,000 $576,000
*Currently allocated on sales volume (unitssold).
Currently, customer-driven costs are assigned to customers basedon units sold, a unit-level driver. Assign costs to customers byusing an ABC approach.
order filling rate =
selling call rate =
cost assignments:
large retailers =
smaller retailers =

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3.7 Ratings (419 Votes)

A B C AB Particulars Activity Cost Total Cost Driver Activity Allocation Rate Order Filing Costs 2545200 3636 700 Per Order Sales Call Costs 1440000 900 1600 Per Sales Call Total See Answer

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	Large Retailer	Smaller Retailers
Units purchased	108,000	72,000
Orders placed	36	3,600
Number of sales calls	18	882
Manufacturing costs	$43,200,000	$28,800,000
Order filling costs allocated*	$1,527,120	$1,018,080
Sales force costs allocated*	$864,000	$576,000
*Currently allocated on sales volume (unitssold).