Customer profitability, distribution. Spring Distribution has decided to analyze the profitability of five new customers. It buys bottled water at $12 per case and sells to retail customers at a list price of $14.40 per case. Data pertaining to the five customers are:

Its five activities and their cost drivers are:

1. Compute the customer-level operating income of each of the five retail customers now being examined (P, Q, R, S, and T). Comment on the results.

2. What insights are gained by reporting both the list selling price and the actual selling price for each customer?

3. What factors should Spring Distribution consider in deciding whether to drop one or more of the fivecustomers?

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Customer Cases sold List selling price Actual selling price Number of purchase orders Number of customer visits Number of deliveries Miles traveled per delivery Number of expedited deliveries 2,080 $14.40 8,750 60,800 3,900 31,800 $14.40 $1.92 25 2 40 $14.40 $14.16 25 3 30 4 $14.40 $14.40 $12.96 30 3 20 40 $14.40 15 $13.20 30 6 60 3 10 14