Calculations for:

Assume the role of Melissa Dunhill (the controller). Based on your analysis (i.e., questions 1-3 above), can you explain the difference in profitability of the five orders calculated by the time-driven ABC system as compared to the basic system they are currently using?

order 1 and 2are the same, except the 2nd order has a surcharge. thus the second order gross margin is higher than the 1st order.

order 3 and 4 are the similar as order 1 and 2 except they are scaled by factor 10.

Order 4 has a postive profit contribution and its break even on its current delivery service.

Order 5 shows the impact of hidden costs due to manual order entry and long payment terms. it is similar to order 3 except for manual vs electronic billing and payment in 120 days vs 30 days.