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Homework answers / question archive / Carlton Products Company has analyzed the indirect costs associated with servicing its various customers in order to assess customer profitability

Carlton Products Company has analyzed the indirect costs associated with servicing its various customers in order to assess customer profitability

Accounting

Carlton Products Company has analyzed the indirect costs associated with servicing its various customers in order to assess customer profitability. Results appear below:

Cost Pool

Annual Cost

Cost Driver

Annual Driver Quantity

 

Processing electronic orders

$1,000,000

Number of orders

500,000

Processing non-electronic orders

$2,000,000

Number of orders

400,000

Picking orders

$3,000,000

Number of different products ordered

800,000

Packaging orders

$1,500,000

Number of items ordered

50,000,000

Returns

$2,000,000

Number of returns

50,000

If all costs were assigned to customers based on the number of items ordered, what would be the cost per item ordered?

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