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activities: Ring Delights is a new company that manufactures custom jewelry. Ring Delights currently has six customers referenced by customer number: 01, 02, 03,
activities: Ring Delights is a new company that manufactures custom jewelry. Ring Delights currently has six customers referenced by customer number: 01, 02, 03, 04, 05, and 06. Besides the costs of making the jewelry, the company has the following (Click the icon to view the activities.) (Click the icon to view the customer data.) Read the requirements. Requirement 1. Calculate the customer-level operating income for each customer. Rank the customers in order of most to least profitable and prepare a customer-profitability analysis. (Use parentheses or a minus sign when entering operating losses.) Customer-level operating income (loss) Customer 04 01 02 03 $ 45 $ 1,111 $ (32) $ 580 $ 05 06 590 $ 10 Rank the customers in order of most to least profitable and prepare a customer-profitability analysis in terms of operating income. (Use parentheses or a minus sign when entering negative numbers and losses. Enter percents rounded to two decimal places, X.XX%) Cumulative Customer- Customer-Level Cumulative Level Oper. Income as a Customer Customer-level Number Oper. Income Customer Revenue Oper. Income + Revenue Customer-Level Oper. Income % of Total Customer- Level Oper. Income 01 % % 02 % % 03 % % 04 % % 05 % % 06 % % Data Table Information about the six customers follows. Some customers purchased multiple items. The cost of the jewelry is 60% of the selling price. Customer number 01 02 03 04 05 06 Sales revenue $ 450 $ 3,800 $ 270 $ 2,200 $ 4,600 $ 650 Cost of item(s) $ 270 $ 2,280 $ 162 $ 1,320 $ 2,760 $ 390 Hours spent on customer order 3 8 1 4 25 5 Hours on fittings 0 1 0 0 0 0 Number of rush orders 0 0 1 1 0 0 Number of return visits 1 0 5 1 More Info 1. Customer orders. The salespeople, designers, and jewelry makers spend time with the customer. The cost driver rate is $45 per hour spent with a customer. 2. Customer fittings. Before the jewelry piece is completed, the customer may come in to make sure it looks right and fits properly. Cost driver rate is $24 per hour. 3. Rush orders. Some customers want their jewelry quickly. The cost driver rate is $95 per rush order. 4. Number of customer return visits. Customers may return jewelry up to 30 days after the pickup of the jewelry to have something refitted or repaired at no charge. The cost driver rate is $25 per return visit. Data Table Information about the six customers follows. Some customers purchased multiple items. The cost of the jewelry is 60% of the selling price. Customer number 01 02 03 04 05 06 Sales revenue $ 450 $ 3,800 $ 270 $ 2,200 $ 4,600 $ 650 Cost of item(s) $ 270 $ 2,280 $ 162 $ 1,320 $ 2,760 $ 390 Hours spent on customer order 3 8 1 4 25 5 Hours on fittings 0 1 0 0 0 0 Number of rush orders 0 0 1 1 0 0 Number of return visits 0 1 0 1 5 10 1 Requirements 1. Calculate the customer-level operating income for each customer. Rank the customers in order of most to least profitable and prepare a customer-profitability analysis. 2. Are any customers unprofitable? What is causing this? What should Ring Delights do about these customers?
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