UFO Ltd manufactures lenses for the mobile phones. The cost accountant has recen

Question

UFO Ltd manufactures lenses for the mobile phones. The cost accountant has recently completed a customer-profitability study. The following activity-based costing information was the basis for the 2017 analysis Cost driver rate ($) 1,500 300 50 500 Cost driver Customer-related activities Sales activity Order taking Special handling Special shipping base Sales visit Purchase orders Units handled Shipments In 2017, cost-driver data for two of UFO's customers were as follows: Customer-related activitiesCustomer A Sales activity Order taking Special handling Special shipping Customer B 7 visits 20 orders 9 visits 15 orders 900 units handled 500 units handled 18 shipments 20 shipments

Explanation / Answer

Solution:-

(A)

(B)

Company need to increase sales price for customer B & F or

Company not need to sale to B & F

Particulars Customer A Customer B Sales revenue 222000 123000 Less:-COGS 90000 60000 Less:-General selling cost 24000 18000 Less:-Adm Cost 19000 16000 Less:- Customer related activities Sales Activity (1500*9) = 13500 (1500*7) = 10500 Order Taking (300*15) = 4500 (300*20) = 6000 Special Handling (900*50) = 45000 (500*50) = 25000 Special shiping (500*18) = 9000 (500*20) = 10000 Profit 17000 (22500)

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.