=+As Jill Millbank, SO’s new management accountant, notes that office overhead is more than 10% of total costs, she spends a couple of weeks analysing the consumption of office overhead resources by customers. She collects the following information:

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5 I J K Activity area Cost-driver rate Service call handling 75 per service call Parts ordering 80 per web-base parts order Billing and collection 50 per bill (or reminder)

Customer database maintenance 10 per service call

$

$

$

$

Chapter 9: Pricing decisions and customer-profitability analysis 365 M09_HORN3377_02_LT_C09.indd 365 2/09/13 3:45 PM 120 150 60 240 210 90 8

9 10 11 A B C D E F Avery Okie Wizard Grainger Duran Number of service calls 150 40 180 Number of web-based parts orders 120 60 150 Number of bills (or reminders) 30 90 120 Required 1 Calculate customer-level operating profit using the new information that Jill Millbank has gathered.