Sleepeze Company produces mattresses for 20 retail outlets. Ofthe 20 retail outlets, 19 are small, separately owned furniturestores and one is a retail chain. The retail chain buys 60% of themattresses produced. The 19 smaller customers purchase mattressesin approximately equal quantities, where the orders are about thesame size. Data concerning Sleepeze’s customer activity are asfollows:
| Large Retailer | Smaller Retailers |
| Units purchased | 108,000 | | 72,000 | |
| Orders placed | 36 | | 3,600 | |
| Number of sales calls | 18 | | 882 | |
| Manufacturing costs | $43,200,000 | | $28,800,000 | |
| Order filling costs allocated* | $1,527,120 | | $1,018,080 | |
| Sales force costs allocated* | $864,000 | | $576,000 | |
| *Currently allocated on sales volume (unitssold). | |
Currently, customer-driven costs are assigned to customers basedon units sold, a unit-level driver. Assign costs to customers byusing an ABC approach.
order filling rate =
selling call rate =
cost assignments:
large retailers =
smaller retailers =
