Question
Bob Walker is the manager of the Walker Brothers Gifts a distributor of beauty products. He has been trying to figure out the individual customer
Bob Walker is the manager of the Walker Brothers Gifts a distributor of beauty products. He has been trying to figure out the individual customer profitability of two of his best customers - the Paul, Inc. and Ringo Inc. Walker Brothers has the following activity areas, order processing, line item ordering, store deliveries, carton deliveries and shelf stocking. The cost driver rates for order processing is $36 per order; line item ordering, $4 per line item; store deliveries, $45 per store delivery; carton deliveries, $2 per carton and shelf stocking, $18 per stocking hour.
The following information for Paul, Inc. and Ringo Inc. is as follows:
Paul, Inc. | Ringo, Inc. | |
Total orders | 11 | 16 |
Average line items per order | 15 | 9 |
Total store deliveries | 10 | 6 |
Average cartons shipped per store delivery | 18 | 24 |
Average revenue per delivery | $1650 | $1850 |
Average hours of self-stocking per store delivery | 0.50 | 0.75 |
Average cost of goods sold per delivery | $1375 | $1145 |
Required:
Determine the operating income for Paul, Inc. and Ringo, Inc. by filling out the table below:
Paul, Inc. | Ringo. Inc. | |
Revenues
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Cost of Goods Sold
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Gross Margin
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Operating Costs
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Operating Income
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