Pool Pty Ltd manufactures above ground swimming pools for Australian households. The company sells the product at a price of $1200 to three retailers (A, B and C). The cost of goods sold for the product is $900.
Budgeted data for 20X7 is as follows:
Sales and administrative expenses of $180,000 comprise mainly personnel costs. All employees are paid at the same rate. These costs are related to three activities:
1. Sales order processing (employing one staff member)
2. After-sales customer service (employing five staff members)
3. Demonstration services (employing four staff members). These costs arise when the three major retailers request demonstration to prospective purchasers.
The activity drivers are as follows:
Sales ordering - number of sales orders;
After -sales customer service - number of service requests
Demonstration services - number of demonstration requests
The following activity information has been gathered for Pool Pty Ltd's three retailers.
Retailer
Total
A
B
C
Sales volume
250
260
240
750
Number of sales orders
25
125
50
200
Number of service requests
110
110
180
480
Number of demonstration requests
80
90
230
400
1. Using a traditional volume-based costing approach, what is the full unit cost of a sale to Retailer B?
A. $900
B. $1140
C. $1250
D. $1500
ADDITIONAL REQUIREMENT
This multiple choice question lies from Corporate Strategy and they define about the full unit cost of sale to the retailer of a ground pool manufacturing company.