Cooper Company Is Trying to Improve Its Customer Profitability Analysis

Essay

Cooper Company is trying to improve its customer profitability analysis by tracing more of its indirect costs to customers. The company has performed an activity analysis and has identified three indirect cost pools: order taking, sales calls, and product deliveries. Cooper Company has assembled data regarding the costs of these three activities and the amounts consumed by its four customers. The data is presented in the table below:
Required:
Develop an activity-based cost rate for each activity and use it to trace the costs to the individual customers.