Homestead Corporation sells a line of power tools to home improvement chains, generating a cost of goods sold equal to 70% of net sales. The selected data that follow relate to the period just ended for the company's three largest customers: Weekend Project, Tool Mart, and Fix-It City.

Homestead's management recently attended a seminar and learned that customers with excessive requests and demands can have a significant, negative impact on corporate profitability. 

Required: 

A. For each of the three chains, compute: 1. Total customer-related costs as a percentage of gross margin. 

2. The average order size (ignoring sales returns). 

3. The ratio of regular orders to rush orders. 

4. The number of sales returns as a percentage of the number of total orders. 

B. Prepare a brief summary of your findings. Should Homestead work with any of the chains in an effort to improve results? Explain.

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Weekend Project Fix-It City Tool Mart Gross sales volume: Dollars Number of orders Type of order: Regular Rush Sales returns: $4,900,000 175 $2,000,000 50 $4,600,000 125 40 110 135 40 10 15 Dollars Number of returns Total customer-related costs $100,000 $400,000 $240,000 20 $245,100 $918,000 $457,800