Customer costing, merchandising. (Continuation of 4-30) Flair decides to further use the activity-based costing information to examine individual customer profitability within each distribution market. He focuses first on the "Ma and Pa Single-Store" distribution market.

Two customers are used to highlight the new insigr ts available with the activity-based costing approach. Data pertaining to these two customers in August 19 4 are:

Required 1. Use the activity-based costing information to compute the operating income of each customer in August 19_4. Comment on the results.
2. Flair ranks the individual customers in the "Ma and Pa" single-store distribution market on the basis of operating income. The cumulative operating income of the top 20% of customers is $55,680. Figure Four reports negative operating income of $31,247 for the bottom 40% of its customers. Make four recommendations that you think Figure Four should consider in light of this new customer-profitability information.