First Décor Has Analyzed the Indirect Costs Associated with Servicing

question 115

Multiple Choice

First Décor has analyzed the indirect costs associated with servicing its various customers in order to assess customer profitability. Results for the year appear below:
$\begin{array}{lrlr}\hline \text { Cost Pool } & \text { Cost } & \text { Cost Driver } & \text { Quantity } \\\hline \text { Processing electronic orders } & \$ 400,000 & \text { Number of orders } & 40,000 \\\text { Processing non-electronic orders } & 120,000 & \text { Number of orders } & 8,000 \\\text { Picking orders } & 240,000 & \text { Number of different products ordered } & 120,000 \\\text { Packaging orders } & 180,000 & \text { Number of items ordered } & 150,000 \\\text { Returns } & 15,000 & \text { Number of returns } & 3,000\end{array}$
What is the cost allocation for two Internet orders for 22 items with 7 different products and one return?

• A) $65.40
• B) $33.20
• C) $60.40
• D) $40.40

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Definitions:

National Purchase Diary Panel

A research panel used to collect data on consumer purchasing habits, preferences, and behaviors by tracking their purchases over time.

Panel Data

A type of data collected from the same subjects or entities repeatedly over a period of time, allowing for monitoring and analyzing changes.

Customer Satisfaction Surveys

Tools used by businesses to gauge the level of satisfaction of their customers with products or services.

Quality Improvement

The systematic process of enhancing the standard and performance of products, services, or processes to meet or exceed customer expectations.