Moustache Manufacturing
Moustache Manufacturing Has Two Classes of Distributors: JIT

question 49

Multiple Choice

Moustache Manufacturing
Moustache Manufacturing has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders, and the non-JIT distributor tends to place larger, less frequent orders. Both types of distributors purchase the same product. The customer activities and costs for the previous quarter are found below: $\begin{array}{lrr}&\text { JIT } & \text { Non-JIT }\\\text { Sales Orders } & 300 & 20 \\\text { Sales Calls } & 25 & 25 \\\text { Service Calls } & 150 & 75 \\\text { Average Order Size } & 100 & 1,000 \\\text { Manufacturing Cost/Unit } & \$ 50 & \$ 50\end{array}$ $$\begin{array}{l}\text { Customer Costs: }\\\begin{array} { l l } \text { Processing Sales Orders } & \$ 200,000 \\\text { Selling Goods } & \$ 120,000 \\\text { Servicing Goods } & \$ 150,000 \\\text { Total } & \$ 470,000\end{array}\end{array}$$
-Refer to Moustache Manufacturing. What is the activity rate for processing sales orders?

• A) $1.47 per order
• B) $182.00 per order
• C) $625.00 per order
• D) $667.00 per order

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Definitions:

Price-Elasticity Coefficient

A measure indicating how much the quantity demanded of a good responds to a change in its price, indicating its sensitivity.

Price Elasticity

An assessment of the extent to which the demand or supply of a product shifts following a price adjustment.

Total Amount

The complete sum or quantity of something, often referring to money, goods, or services.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, leading to a stable market condition.