First Décor Has Analyzed the Indirect Costs Associated with Servicing

question 76

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: $\begin{array}{lrlr}\hline \text { Cost Pool } & \text { Cost } & \text { Cost Driver } & \text { Quantity } \\\hline \text { Processing electronic orders } & \$ 400,000 & \text { N umber of orders } & 40,000 \\\text { Processing non-electronic orders } & 120,000 & \text { N umber of orders } & 8,000 \\\text { Picking orders } & 240,000 & \text { N umber of different products ordered } & 120,000 \\\text { Packaging orders } & 180,000 & \text { N umber of items ordered } & 150,000 \\\text { Returns } & 15,000 & \text { Number of returns } & 3,000\end{array}$ 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:

Shared Perceptions

Common understanding or beliefs held by a group about certain aspects of their environment or tasks.

Influence Control

The ability to sway or modify the behavior, opinions, or decisions of others through various means.

Aspect Control

The ability to manage or influence specific facets or variables within a particular domain or situation.

Group Influence

The impact or effect that a group has on the attitudes, values, beliefs, or behaviors of its individual members.