# Calculate Activities Using Activity Based Costing System

Question

Northern Distributors Plc. sells bottled water to corporate clients. The cost it pays for each bottle of water is £1.50. Its normal (list) selling price is £1.99 per bottle. Northern has decided to analyse the profitability of each of its five customers (101, 102, 103, 104 and 105). The following table details information about each of the five customers:

 101 102 103 104 105 Number of Bottles Sold 50,000 75,000 35,000 90,000 10,000 Price Discount 5% 10% 10% 5% 0% Number of Orders 50 50 35 100 25 Number of Sales Visits 5 8 3 10 4 Number of Deliveries 25 30 35 50 25 Distance to Customer 10 km 5 km 30 km 15 km 10 km

Using an activity based costing system, Northern has adopted the following four activities and related cost per activity driver:

• Order Taking (£60/order);
• Sales Visit (£300/visit);
• Delivery (£6/km);
• Product Handling (£0.10 per unit).

Required:

Determine the profitability of each of the five customers.

Summary

The question belongs to Accounting and it discusses about calculation of four activities based on activity costing system.

Total Word Count 189

• Rasha

this is a very good website

• maani

I have 50 questions for the same test your page is showing only 28

• joeanne

• joeanne

hi can anyone help or guide me to my assignments. thanks

• Monik

• Cristina

This solution is perfect ...thanks

• Janete

Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

• Sandeep

Perfect bank of solution.

• Oxana

great !

• Paul Brandon-Fritzius

thanks for the quick response. the solution looks good. :)

• tina Johnson

thnx for the answer. it was perfect. just the way i wanted it.

• Giuseppe

works fine.