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:
$$\begin{array} { l r r }
& \text { JIT } & \text { Non-JIT } \
\text { Sales Orders } & 300 & 20 \
\text { Sales Calls } & 25 & 25 \
\text { Service Calls } & 150 & 75 \
\text { Average Order Size } & 100 & 1,000 \
\text { Manufacturing Cost/Unit } & \$ 50 & \$ 50
\end{array}$$ $$\begin{array}{l}
\text { Customer Costs: }\
\begin{array} { l l }
\text { Processing Sales Orders } & \$ 200,000 \
\text { Selling Goods } & \$ 120,000 \
\text { Servicing Goods } & \$ 150,000 \
\text { Total } & \$ 470,000
\end{array}
\end{array}$$
-Refer to the Figure.What is the total customer cost for the JIT distributor?
A)$60,000
B)$100,050
C)$187,500
D)$347,550

Question

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:
 $$\begin{array} { l r r } 
& \text { JIT } & \text { Non-JIT } \
\text { Sales Orders } & 300 & 20 \
\text { Sales Calls } & 25 & 25 \
\text { Service Calls } & 150 & 75 \
\text { Average Order Size } & 100 & 1,000 \
\text { Manufacturing Cost/Unit } & \$ 50 & \$ 50
\end{array}$$ $$\begin{array}{l}
\text { Customer Costs: }\
\begin{array} { l l } 
\text { Processing Sales Orders } & \$ 200,000 \
\text { Selling Goods } & \$ 120,000 \
\text { Servicing Goods } & \$ 150,000 \
\text { Total } & \$ 470,000
\end{array}
\end{array}$$
-Refer to the Figure.What is the total customer cost for the JIT distributor?
A)$60,000
B)$100,050
C)$187,500
D)$347,550

Quizplus · Accepted Answer

The total customer cost for the JIT distributor can be calculated by allocating the costs based on the activities. 1. **Processing Sales Orders**: The JIT distributor placed 300 orders out of a total of 320 orders (300 JIT + 20 non-JIT). The cost of processing sales orders is $200,000. The JIT distributor's share is $(300/320) \times 200,000 = \$187,500$.2. **Selling Goods**: Both types of distributors had the same number of sales calls (25 each), so the cost is split evenly. The selling goods cost is $120,000, so each distributor's share is $120,000 / 2 = \$60,000$.3. **Servicing Goods**: The JIT distributor had 150 service calls out of a total of 225 service calls (150 JIT + 75 non-JIT). The cost of servicing goods is $150,000. The JIT distributor's share is $(150/225) \times 150,000 = \$100,000$.Adding these costs together: $187,500 + 60,000 + 100,000 = \$347,500$. However, given the options, it seems there might be a slight discrepancy in the final total provided in the options. The correct calculation based on the provided method is \$347,500, but since that option isn't available and assuming a minor error in the calculation or a typo in the options, the closest available option is D) $347,550.

Moustache Manufacturing Has Two Classes of Distributors: JIT Distributors and Non-JIT