Figure 10-5
Ander Company Produces Precision Equipment for Major Buyers

Multiple Choice

Figure 10-5
Ander Company produces precision equipment for major buyers. Of the six customers, one accounts for 40 per cent of the sales, with the remaining five accounting for the rest of the sales. The five smaller customers purchase equipment in roughly equal quantities. Orders placed by the smaller customers are about the same size. Data concerning Ander's customer activity follow: $\begin{array}{lll}&\text { Large Customer }&\text { Five Smaller }\\&&\text { Customers }\\\text { Units purchased } & 400,000 & 600,000 \\\text { Orders placed } & 10 & 350 \\\text { Number of sales calls } & 20 & 230 \\\text { Manufacturing cost } & £ 1,200,000 & £ 1,800,000\end{array}$ Order-filling costs for Ander Company total £360,000, and sales-force costs are £375,000.
-Refer to Figure 10-5, what amount of order-filling costs would be allocated to the large customer if these costs are allocated based on sales volume?

A) £144,000
B) £216,000
C) £150,000
D) £225,000