Attached is a case study for the subject 'Advanced Management Accounting'. I would need answers on to calculating the most profitable for 'CUSTOMER SEGMENT' using the current basis of measuring the profitability and ABC Method. And also calculations for calculating the most profitable for the 'TWO SMALL RETAILERS' using the current basis of measuring the profitability and ABC Method.

When that is done i would need answers for:

a)Explaining if any customer segment is too costly to service and should be abandoned, if yes, which one and why. Also explain repercussions of abandoning any customer segment, if you chose to say "Yes".

b)Based on individual customer profitability analysis, suggest what strategies AG Ltd should adopt to improve overall profitability, if they don't want to abandon any customer segment.

c)Suggest any new market avenues that are available for AG Ltd to expand geographical market to increase sales.

Thank you

Workplace Simulation - Presentation and submission of business report to the management of AG Ltd AG Ltd manufactures two models of washing machines- WM110 and WM120. The business has grown substantially and its products were highly regarded because of its quality. But from last 2-3 years the demand of its products has declined. Tracey is the Production Manager of the company. She thinks that the business is facing competition from importers. Recovery in Australian dollar over last two years has also not helped much in sales growth. WM110 and WM120 both are technologically advanced and sophisticated and because of this reason they are more complex to make and AG Ltd charges premium price for both of its products. Lance, the Management Accountant of the company was analysing the sales of these products of last 3 years. He is of the opinion that we are not managing our customers effectively. In order to gain an understanding of the revenues and costs of different types of customers, Lance decided to undertake an analysis of the profitability of the customers. He thinks that by adopting an ABC approach and systematically allocating customer related costs will enable a more accurate analysis of the costs that organisation incurs in servicing each customer segment. He can then use this information to see customer segment profitability; and can decide if any customer segment is too costly to service and should be abandoned. He also wants to assess strategies to reduce costs or increase revenues to improve bottom line. AG Limited has divided their entire customer base into following three major customer segments: Major nationwide distributors Statewide retailers Small retailers For last many years, AG Ltd is using the gross margin percentage as the measure of profitability for these customer segments. C6148 Advance Diploma of Accounting - FNS60215 ACCT5392C- Prepare and Analyse Management Accounting Information - FNSACC613 Semester 2, 2017 Page 1 Revenues and Cost of sales by customer segment for AG Ltd for the year ending 30 June 2017 Customer segments Sales revenues Cost of sales Nationwide Distributors Statewide retailers Small retailers $16 000 000 $4 000 000 $1 300 000 $13 000 000 $3 200 000 $850 000 Lance identified 5 key activity areas performed by the staff members in serving three different customer segments. The details of each cost pool and the related cost drivers are as under: Activity Areas Cost Driver Order processing Product Ordering Distribution Cartons shipped Service to customers Total indirect costs excluding cost of sales No. of orders No. of products ordered No. of deliveries made No. of cartons shipped No. of hours of customer service Activity Costs $250000 $210000 $410000 $350000 $180000 Use of activity 5000 orders 52500 items 4100 deliveries 70000 cartons shipped 900 hours $1400000 Information about each customer service indirect cost pool and customer market segment for the year ending 30 June 2017 is as under: Orders processed No. of products ordered No. of Deliveries No. of cartons shipped Customer service hours Nationwide distributors 500 Statewide retailers 750 Small retailers 3750 Total 12000 13500 27000 52500 500 500 3100 4100 45000 8000 17000 70000 585 255 60 900 5000 Lance decided to further undertake a customer profitability analysis on small retailers - Noora Pty Ltd and Enjoy Trading. Information about these two customers is as under: C6148 Advance Diploma of Accounting - FNS60215 ACCT5392C- Prepare and Analyse Management Accounting Information - FNSACC613 Semester 2, 2017 Page 2 Sales Revenue Cost of goods sold Orders processed No. of products ordered No. of Deliveries No. of cartons shipped Customer service hours Noora Pty Ltd 40000 18500 40 400 Enjoy Trading 15000 9500 25 375 35 280 25 100 1 6 Required: 1. Calculate the most profitable customer segment using the current basis of measuring the 2. 3. 4. 5. 6. profitability for various customer segments. Calculate the most profitable market segment using ABC method. Compare the results with those in task (1) above. Allocate the customer service costs to each small retailer. Calculate the profitability of the two small retailers. Assume that you are Lance. Using the information in tasks 1-5, write a report to the management : a) Explaining if any customer segment is too costly to service and should be abandoned, if yes, which one and why. Also explain repercussions of abandoning any customer segment, if you chose to say \"Yes\". b) Based on individual customer profitability analysis, suggest what strategies AG Ltd should adopt to improve overall profitability, if they don't want to abandon any customer segment. c) Suggest any new market avenues that are available for AG Ltd to expand geographical market to increase sales. 7. Your team will also complete a five to ten-minute power point presentation whereby all members of your group are required to present the findings (of your report) as a \"snap-shot\" to the Management team of AG Ltd. The content of the presentation must be consistent with your business report findings but summarised in 10 minutes. What you present in terms of content would be from your perspective, the main observations, issues, strengths, weaknesses and recommendations. Submission details: 1. The business report needs to be submitted by the end of week 9 ie 8 September, 2017. The team presentations will also be done in week 9. 2. An assignment cover sheet is required with all team member's details and signatures. 3. Minutes of meetings conducted in and outside of class must be submitted to your teacher in week 9 and you will be required to complete a peer review on each team member which is to be given to your teacher before leaving the class. C6148 Advance Diploma of Accounting - FNS60215 ACCT5392C- Prepare and Analyse Management Accounting Information - FNSACC613 Semester 2, 2017 Page 3 4. Please refer to the Assessment Cover sheet for this assessment under the \"Assessment tasks\" link on the blackboard which details what constitutes competency and the marking structure for this assessment. C6148 Advance Diploma of Accounting - FNS60215 ACCT5392C- Prepare and Analyse Management Accounting Information - FNSACC613 Semester 2, 2017 Page 4