First Décor Has Analyzed the Indirect Costs Associated with Servicing

question 122

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:
$\begin{array}{lrlr}\hline \text { Cost Pool } & \text { Cost } & \text { Cost Driver } & \text { Quantity } \\\hline \text { Processing electronic orders } & \$ 400,000 & \text { Number of orders } & 40,000 \\\text { Processing non-electronic orders } & 120,000 & \text { Number of orders } & 8,000 \\\text { Picking orders } & 240,000 & \text { Number of different products ordered } & 120,000 \\\text { Packaging orders } & 180,000 & \text { Number of items ordered } & 150,000 \\\text { Returns } & 15,000 & \text { Number of returns } & 3,000\end{array}$
If all costs were assigned to customers based on the number of items ordered, what would be the cost per item ordered?

• A) $6.37
• B) $33.20
• C) $1.20
• D) $0.16

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Definitions:

Cross-Cultural Analyses

The examination and comparison of different cultural practices, beliefs, and values, aiming to identify patterns and differences across cultures.

GLOBE Researchers

Scholars involved in the Global Leadership and Organizational Behavior Effectiveness research program, studying how culture influences societal and organizational practices.

Implicit Leadership

The automatic, unconscious assumptions and expectations about the traits and behaviors that characterize an effective leader.

Intuitive Conception

An understanding or insight arrived at through intuition rather than based on analytical reasoning or empirical evidence.