Baltimore Pharmacy 16 Lundar Pharmacy Activity Area Cost Driver Rate Total orders 13 1. Order processing 2. Line-item ordering 7 Average line items per order Total store deliveries 15 6 13 3. Store deliveries $42 per order $7 per line item $50 per store delivery $2 per carton $13 per stocking-hour 20 24 4. Carton deliveries 5. Shelf-stocking 0 0.25 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 $ 2,400 $ 1,750 $ 2,200 $ 1,650 Figure Eight 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 Figure Eight, 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.) Required 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 your answers to the nearest whole dollar. Use parentheses or a minus sign for operating losses.) Revenues Baltimore Pharmacy Lundar Pharmacy $ 14,400 $ 22,750 13,200 21.450 Cost of goods sold Gross margin 1,300 1,200 1,996 Operating costs $ (796) Operating income (loss)