Clarke Industries collects information on two customers for the past year:
An in-stock order is an order for which all the items included are in inventory at the time the order is received.
Required:
Compute the customer specific contribution of each customer for the year using:
a.16% of revenues as the allocation rate for customer-related costs.
b.The activity-based costing approach.
Definitions:
Competitive Price-Taker
A firm or individual that has no control over the market price and must accept the prevailing price set by market supply and demand.
Profit
The financial gain realized when the revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.
Price-taker Firm
A firm that has no control over the market price and must accept the prevailing market price for its products.
Marginal Revenue
The extra revenue generated by the sale of an additional unit of a product or service.
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