Johnson Beverage

Activity cost pool

Activity cost driver

Number of cases

Activity cost d

Product handling

Taking orders from customers

Delivering the product

Expediting deliveries (other than automobile)

Sales visits to customers

sold 800.000

Number of

purchase orders 500

Number of miles

travelled 44.800

Number of expedited

deliveries 2.500

Number of sales

visits 360

Customer profitability report

Saver Superstore

Oscar's OddLots

Net revenues

$ 1.168.000

$ 1.192.000

Cost of goods sold

$ 1.048.000

$ 1.048.000

Gross margin

$ 120.000

$ 144.000

Customer service costs:

Product handling

$ 67.200

$ 67.200

Taking orders from customers

$ 3.200

$ 8.000

Delivering the product

$ 1.719

$ 23.750

Expediting deliveries (other than

automobile)

$ 792

$ 19.800

Sales visits to customers
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$ 3.000

$ 6.250

Total customer service costs

$ 75.911

$ 125.000

Customer profit

$ 44.089

$ 19.000

Customer profit (% of revenue)

3,77%

,59%

2 Comparision of estimated customer service costs

As per traditional costing system

$ 116.800

$ 119.200

As per activity bases costing system

$ 75.911

$ 125.000

Difference

$ (40.889)

$ 5.800

The reason for the different results under different costing methods is the m products to compute customer profitability. Customer service costs ...

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