Blue Vibrance Company sells a product used in many manufacturing processes. The sales activity involves three activity areas: $\begin{array}{ll}
\text { Activity Area } & \text { Cost Driver and Rate } \
\text { Order taking } & \$ 100 \text { per purchase order } \
\text { Sales visits } & \$ 50 \text { per visit } \
\text { Delivery vehicles } & \$ 1 \text { per delivery mile }
\end{array}$ The following customer information is given: $\begin{array}{lrr}&\mathrm{AX} & \mathrm{BY} & \mathrm{DZ}\
\text { Units sold } & 100,000 & 80,000&60,000 \
\text { List price } & \$ 50 & \$ 50&\$50 \
\text { Actual sal es price } & \$ 45 & \$ 48 &\$50\
\text { Number of purchase orders } & 30 & 20 &10\
\text { Number of sales visits } & 6 & 5&3 \
\text { Number of delivery miles } & 100 & 80&60
\end{array}$ Which customer has the least activity costs?

Question

Quizplus · Accepted Answer

DZ has the least activity costs, calculated as follows: $10 \times \$100$ for purchase orders, $3 \times \$50$ for sales visits, and $60 \times \$1$ for delivery miles, totaling \$1,330. Comparatively, AX and BY have higher activity costs due to more purchase orders, sales visits, and delivery miles.

Blue Vibrance Company Sells a Product Used in Many Manufacturing