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Suppose that Stilwater Designs has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders, and the non-JIT istributor tends to place larger less frequent orders. Both types of distributors are buying the same product. Stillwater Designs provides the following information about customer related activities and costs for the most recent quarter: JIT Non-JIT Distributors Distributors Sales orders 1,200 Sales calls Service calls 120 70 70 350 175 Average order size 650 6,500 Manufacturing costunit $125 $125 Customer costs: Processing sales orders $3,280,000 1,120,000 Selling goods Servicing goods Total 1,050,000 $5,450,000 Required: 1. Calculate the total revenues per distributor category, and assign the customer costs to each distributor type by using revenues as the allocation base. Selling price for one unit is $150. Round calculations to the nearest dollar UIT Non-JIT Sales in its Sales Dinar 1. calculate the total revenues per distributor category, and assign the customer costs to each disimoutor type by using revenues as the location base. Seing price for one unit is $150. Round calculations to the nearest dollar JIT Non-JIT Sales (in units) Sales Allocation 2. Conceptual Connection: Calculate the customer cost per distributor type using activity-based cost assignments. Round the interim calculations to the nearest dollar JIT Non-IT Ordering costs Selling costs Service costs Total For non IT distributors by how much can the price be decreased without affecting customer profitability? Round your answer to the nearest cent. per unit 3. Assume that the IT distributors are simply imposing the frequent orders on Stillwater Designs. No formal discussion has taken place between IT customers and Stillwater Designs regarding the supply of goods on a IT basis. The sales pattern has evolved over time. As an independent consultant, what would you suggest to Stilwater Designs management? It sounds like the IT buyers are switching their inventory carrying costs to Stillwater Designs without any significant benefit to Stillwater Designs, Stilwater Designs needs to prices to reflect the additional demands on customer support activities. Furthermore, additional may be needed to reflect the increased number of setups, purchases, and so on, that are likely occurring inside the plant. Stillwater Designs should also immediately initiate discussions with its JIT customers to begin negotiations for achieving some of the benefits that a JIT supplier should have, such as contracts. The benefits of contracting may offset most or all of the increased costs from the additional demands made on other activities

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