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?
a) $0.19
b) $10.62
c) $0.09
d) $6.09