17-36 Customer profitability in a manufacturing firm. Mississippi Manufacturing makes a compo- nent called B2040. This component is manufactured only when ordered by a customer, so Mississippi keeps no inventory of B2040. The list price is $112 per unit, but customers who place "large" orders receive a 10% discount on price. The customers are manufacturing firms. Currently, the salespeople decide whether an order is large enough to qualify for the discount. When the product is finished, it is packed in cases of 10. If the component needs to be exchanged or repaired, customers can come back within 14 days for free exchange or repair The full cost of manufacturing a unit of B2040 is $95. In addition, Mississippi incurs customer-level costs. Customer-level cost driver rates are Order taking Product handling Rush-order processing Exchange and repair costs $360 per order $ 15 per case $560 per rush order $ 50 per unit Information about Mississippi's five biggest customers follows: A B D E 5,400 10% 1,800 10% C 1,200 0 4,400 10% Number of units purchased Discounts given Number of orders Number of cases Number of rush orders Number of units exchanged/repaired 8 540 16 180 50 120 1 20 440 0 50 8,100 10% on half the units 18 810 8 200 7 2 18 70 13 All customers except E ordered units in the same order size. Customer E's order quantity varied, so E got a discount part of the time but not all the time. Required 1. Calculate the customer-level operating income for these five customers. Use the format in Exhibit 17-2. Prepare a customer profitability analysis by ranking the customers from most to least profitable, as in Exhibit 17-10 2 Discuss the results of your customer profitability analysis. Does Mississippi have unprofitable custom- ers? Is there anything Mississippi should do differently with its five customers