Workshape Manufacturing has two classes of distributors: JIT distributors and non-JIT distributors.The JIT distributor places small, frequent orders, and the non-JIT distributor tends to place larger, less frequent orders.Both types of distributors purchase the same product.The customer activities and costs for the previous quarter are as follows:
- Calculate the total customer cost for the non-JIT distributors.(Note: Round the activity rates and activity costs to the nearest dollar.)

A) $150,025
B) $122,500
C) $175,200
D) $147,030
E) $178,791

Question

Workshape Manufacturing has two classes of distributors: JIT distributors and non-JIT distributors.The JIT distributor places small, frequent orders, and the non-JIT distributor tends to place larger, less frequent orders.Both types of distributors purchase the same product.The customer activities and costs for the previous quarter are as follows:
-  Calculate the total customer cost for the non-JIT distributors.(Note: Round the activity rates and activity costs to the nearest dollar.)
 
A) $150,025 
B) $122,500 
C) $175,200 
D) $147,030 
E) $178,791

Quizplus · Accepted Answer

Activity rate for processing sales orders = Cost of processing sales orders / Total number of sales orders = $160,000 / 530 sales orders= $302 per sales order
Activity rate for selling goods = Cost of selling goods / Total number of sales calls = $155,000 / 60 sales calls = $2,583 per sales call
Activity rate for servicing goods = Cost of servicing goods / Total number of service calls = $195,000 / 290 service calls = $672 per service call
Total customer cost for the non-JIT distributors:
Cost of ordering = Activity rate for processing sales orders × Number of sales orders = $302 × 30 sales orders = $9,060
Cost of selling = Activity rate for selling goods × Number of sales calls = $2,583 × 30 sales calls = $77,490
Cost of servicing = Activity rate for servicing goods × Number of service calls = $672 × 90 service calls = $60,480
Total customer cost for the non-JIT distributors = Cost of ordering + Cost of selling + Cost of servicing = ($9,060 + $77,490 + $60,480) = $147,030

Workshape Manufacturing Has Two Classes of Distributors: JIT Distributors and Non-JIT