Enviro-Tech has only two retail and two wholesale customers. Information relating to each customer for 2017 follows (in thousands):

Enviro-Tech’s annual distribution-channel costs are \($33\) million for wholesale customers and \($12\) million for retail customers. The company’s annual corporate-sustaining costs, such as salary for top management and general-administration costs are \($48\) million. There is no cause-and-effect or benefits-received relationship between any cost-allocation base and corporate-sustaining costs. That is, Enviro-Tech could save corporate-sustaining costs only if the company completely shuts down.
1. Calculate customer-level operating income using the format in Exhibit 14-3.
2. Prepare a customer-cost hierarchy report, using the format in Exhibit 14-6.
3. Enviro-Tech’s management decides to allocate all corporate-sustaining costs to distribution channels:\($38\) million to the wholesale channel and \($10\) million to the retail channel. As a result, distribution channel costs are now \($71\) million (\($33\) million + \($38\) million) for the wholesale channel and \($22\) million 1\($12\) million + \($10\) million) for the retail channel. Calculate the distribution-channel-level operating income. On the basis of these calculations, what actions, if any, should Enviro-Tech’s managers take? Explain.
4. How might Enviro-Tech use the new cost information from its activity-based costing system to better manage its business?

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Revenues at list prices Wholesale Customers North America South America Wholesaler Wholesaler Retail Customers Green Energy Global Power $375,000 $590,000 $175,000 $130,000 Discounts from list prices 25,800 47,200 8,400 590 Cost of goods sold 285,000 510,000 144,000 95,000 Delivery costs 4,550 6,710 2,230 2,145 Order processing costs 3,820 5,980 2,180 1,130 Cost of sales visit 6,300 2,620 2,620 1,575