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Tetra Company?s cost system

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Question;1. Assigning;marketing, distribution, and selling expenses to customers, Tetra Company?s;cost system assigns marketing, distribution, and selling expenses to customers;using a rate of 33% of sales revenue. The new controller has discovered that;Tetra?s customers differ greatly in their ordering patterns and interaction;with Tetra?s sales force. Because the controller believes Tetra?s cost system;does not accurately assign marketing, distribution, and selling expenses to;customers, she developed an activity-based costing system to assign these;expenses to customers. She then identified the following marketing;distribution, and selling costs for two customers, Ashton and Brown;Ashton;Brown;Sales representative;travel $9,000 $42,000;Service;customers;15,000 110,000;Handle customer;orders 1,000 12,000;24,000 72,000;The following additional information is;available;Ashton;Brown;Sales;$430,000 $350,000;Cost of;gold sold 220,000 155,000;A.Using the current cost;system?s approach of assigning marketing, distributions, and selling expenses;to customers using a rate of 33% of sales revenue, determine the operating;profit associated with Ashton and with Brown.;B. Using the activity-based costing information provided, determine the;operating profit associated with Ashton and with Brown.;C. Which of the two methods produces more accurate assignments of marketing;distributions, and selling expenses to customers? Explain.

 

Paper#53958 | Written in 18-Jul-2015

Price : $22
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