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Activity Pooled Cost (In $) Cost Drivers Cost Driver Quantity (In Units) Driver Rate (In $)

This document provides cost and activity information for two customers - Customer A and Customer B. It summarizes the key cost drivers, pooled costs, activity costs and operating incomes for each customer. The cost drivers include number of cartons, orders, order lines, and deliveries. It then calculates the operating income for each customer based on their sales and allocated costs from the various activities like warehousing, distribution, order entry and general expenses. Customer A has an operating income of $334 while Customer B has $612.

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Amandeep Dahiya
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42 views7 pages

Activity Pooled Cost (In $) Cost Drivers Cost Driver Quantity (In Units) Driver Rate (In $)

This document provides cost and activity information for two customers - Customer A and Customer B. It summarizes the key cost drivers, pooled costs, activity costs and operating incomes for each customer. The cost drivers include number of cartons, orders, order lines, and deliveries. It then calculates the operating income for each customer based on their sales and allocated costs from the various activities like warehousing, distribution, order entry and general expenses. Customer A has an operating income of $334 while Customer B has $612.

Uploaded by

Amandeep Dahiya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Cost Driver Quantity Driver Rate

(in units)
(in $)

Activity

Pooled Cost (in $)

Cost Drivers

Carton handling at
the distribution
facility

2000000 + 90% of
2400000 = 4160000

No of cartons

80,000

52

Carton shipping by
commercial trucks

450000

No of cartons

75,000

Carton delivery
under Desktop
option

200000 + 10% of No of deliveries


2400000 = 440000

2000

220

Product
Manual
Desktop
Total

Quantity Activity Cost


(in units)
(in $)
75000
3900000
5000
260000
80000
4160000

Manual
Desktop
Total

75000
0
75000

450000
0
450000

Manual
Desktop
Total

0
2000
2000

0
440000
440000

Activity
Order Entry: setting up a
manual order
Order Entry: entering
individual order lines in
an order
Order Entry: validating an
EDI/internet order
General and selling
expenses

Pooled Cost
(in $)

Cost Drivers

Cost Driver Quantity


(in units)

160000

No of manual orders

16,000

600000

No of order lines

150000

40000

No of EDI orders

8000

2000000

Percentage of sales

42500000

Driver Rate (in


$)
10
4
5
0.047058824

Activity
Carton handling at the
distribution facility
Carton shipping by
commercial trucks
Carton delivery under
Desktop option
Order Entry: setting up a
manual order
Order Entry: entering
individual order lines in an
order
Order Entry: vaidating an
EDI/internet order

Cost Driver
No of cartons
No of cartons
No of deliveries
No of manual
orders
No of order lines

No of EDI orders

Sales
Less: Cost of items purchased
Gross Margin
Less
Cost of handling cartons
Cost of shipping cartons by
commercial trucks
Cost of shipping cartons under
Desktop option
Cost of setting up a manual order
Cost of entering individual order
lines
Cost of validating an EDI
General and selling expenses and
interest expenses
Total
Operating Income

Customer A
103,000
85,000
18,000

Customer B
104,000
85,000
19,000

200*52 = 10,400

200*52 = 10,400

200*6 = 1,200

150*6 = 900

25*220 = 5,500

6*10 = 60

100*10=1000

60*4 = 240

180*4=720

6*5 = 30

4,916

5,638

16,846

24,158

1,154

-5,158

Customer A
Sales
Cost of items purchased
Gross margin
Warehousing, distribution and order
entry
General and selling expenses and
interest expenses
Operating Income

Customer B

103,000
85,000
18,000

104,000
85,000
19,000

12,750

12,750

4,916

5,638

334

612

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