Activities your answers to the n come of the top 20% of customers is $52,740. Customers' data

Quality Supply Inc. is a distributor of pharmaceutical products. Its ABC system has five activities. (Click the icon to view the activities.) Rick Flair, the controller of Quality Supply, wants to use this ABC system to examine individual customer profitability within each distribution market He focuses first on the mom-and-pop single-store distribution market Two customers are used to exemplify the insights available with the ABC approach. Data pertaining to these two customers in August are as follows: (Click the icon to view the customers' data.) Requirement 1. Use the ABC information to compute the operating income of each customer in August Comment on the results and what, if anything, Flair should do (Round pur answers to the n Banner Pharmacy Silver Pharmacy Revenues Cost of goods sold Gross margin Operating costs Operating income (loss) has a lower gross margin percentage and consumes resources to obtain this lower margim Activities Activity Area . Order processing 2. 3. 4. 5. Line-item ordering Store deliveries Carton deliveries Shelf-stocking print Cost Driver Rate S38 per order SS per line item S48 per store delivery S3 per carton S12 per stocking-hour Done Requirement 2. Flair ranks the individual customers in the mom-and-pop single-store distribution market on the basis of monthly operating income. The cumulative operating income of the top 20% of customers is $52, 740. auality Supply reports operating losses of $18,290 for the bottom 40% of its customers Make four recommendations that pu think Quality Supply should consider in light of this new customer profitability information Ways Quality Supply could use this information include the following: 1. Pay attention to the top 20% of the customers. 2. Work out ways internally at Quality Supply to the rate per cost driver. 3. Work with customers so that their behaviour 4. Offer salespeople bonuses based on the the total "system-wide" costs of each customer rather than the gross margin of each customer. Customers' data Total orders Average line items per order Total store deliveries Average cartons shipped per store delivery Average hours of shelf-stocking per store delivery Average revenue per delivery Average cost of goods sold per delivery anner Pharmacy 16 11 8 24 2,500 2,250 er Pharmacy 7 21 6 23 0.5 1,950 11500