Blue Paper Delivery has decided to analyze the profitability of four customers. It buys recycled paper at per case and sells to retail customers at a retail price. Data pertaining to the four customers are: Customer 1 2 3 4 Cases sold 2,100 4,200 6,300 4,620 Retail selling price $21.00 $19.95 $18.90 $17.85 Number of purchase orders 63 32 95 126 Number of customer visits 8 16 32 118 Miles traveled 1,654 4,961 7,442 2,315 Blue Paper Delivery three activities and their cost drivers are: Activity Cost Driver Rate Order taking $50.40 per purchase order Customer Visits $35.28 per customer visit Deliveries $4.20 per delivery mile traveled

Requirements

1 Compute customer-level operating income of each customer.

2 Rank customers on their customer -level operating income. Perform cumulative customer level operating income analysis by computing cumulative customer level income as a percentage of total operating income. Comment on the results.