0 indirectcosts cleaning 900 100 1000 cutting 935 65

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Unformatted text preview: contribution. The chain has a disproportionate number of both regular orders and rush orders. Villeagas should work with the management of Chain 2 to find ways to reduce the number of orders, while maintaining or increasing the sales volume. If this is not possible, Villeagas should consider dropping Chain 2, if it can save the customer­related costs. Chain 1 has a disproportionate number of the items returned as well as sale returns. The causes of these should be invest igated so that the profitabilit y contribut ion o f Chain 1 could be improved. 5­17 5­25 (50 min.) ABC, activity area cost­driver rates, product cross­subsidization. 1. Direct costs Direct materials Indirect costs Product support Total costs Cost per pound of potato cuts 2. Cost Pool Cleaning Cutting Packaging Costs in Pool $120,000 $231,000 $444,000 $ ,133 000 1 , = = $1.133 1 000 000 , , Number of Driver Units 1,200,000 raw pounds 3,850 hours* 37,000 hours** Costs per Driver Unit $ 0.10 $60.00 $12.00 $ 150,000 983,...
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