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Nerrod Company sells its products at $720 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs:

Activity Cost Driver and Rate
Sales calls $510 per visit
Order processing $155 per order
Deliveries $50 per order + $0.50 per mile
Sales returns $65 per return and $3.00 restocking per unit returned

Nerrod Company has gathered the following data pertaining to activities it performed for two of its customers:

XBT NINTO
Number of orders 21 2
Number of parts per order 610 2,110
Sales returns:
Number of returns 4 10
Number of units returned 40 50
Number of sales calls 8 15
Miles per delivery 10 20
Shipping terms FOB, Factory FOB, Destination

What is Nerrod's total customer batch-level cost applicable to Ninto?

Answer :

Facundobuzzettigo

Answer:

Total allocated costs= $11,470

Explanation:

To allocate costs to product NINTO, we need to use the following formula:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Sales call= 510*15= 7,650

Order processing= 155*2= 310

Deliveries= 50*2 + 0.50*20= 110

Sales returns= 65*50 + 3*50= 3,400

Total allocated costs= $11,470

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