Vibro Company Sells a Product Used in Many Manufacturing Processes

question 70

Multiple Choice

Vibro Company sells a product used in many manufacturing processes. The sales activity involves three activity areas:
$$\begin{array} { l l } \text { Activity Area } & \text { Cost Driver and Rate } \\\text { Order taking } & \$ 100 \text { per purchase order } \\\text { Sales visits } & \$ 50 \text { per visit } \\\text { Delivery vehicles } & 11 \text { per delivery mile }\end{array}$$ The following customer information is given:
$\begin{array}{lrrrr}&\text {AX}&\text {BY}&\text {CV}&\text {DZ}\\\text { Units sold } & 100,000 & 80,000 & 70,000 & 60,000 \\\text { List price } & \$ 50 & \$ 50 & \$ 40 & \$ 50 \\\text { Actual sales price } & \$ 45 & \$ 48 & \$ 38 & \$ 50 \\\text { Number of purchase orders } & 30 & 20 & 15 & 10 \\\text { Number of sales visits } & 6 & 5 & 4 & 3 \\\text { Number of deliverv miles } & 100 & 80 & 70 & 60\end{array}$
-Refer to the figure.Which customer has the least activity costs?

• A)AX
• B)BY
• C)DZ
• D)CV

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Definitions:

CAPM

The Capital Asset Pricing Model, a theory that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Regression Equation

An equation used in statistics to describe the relationship between a dependent variable and one or more independent variables.

CAPM

The Capital Asset Pricing Model, a theory that describes the relationship between the expected return and risk of investing in a security.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, typically represented by the yield on government securities like U.S. Treasury bonds.