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can you please explain to me how can I calculate the operating income. Question 3 (4 marks+ 2 BONUS MARKS) Figure Four is a distributor
can you please explain to me how can I calculate the operating income.
Question 3 (4 marks+ 2 BONUS MARKS) Figure Four is a distributor of pharmaceutical products. Its ABC system has five activities: Cost Driver Rate in 2012 $40 per order 53 per line item $50 per store delivery $1 per carton $16 per stocking hour Activity Area 1. Order processing 2. Line-item ordering 3. Store deliveries 4. Carton deliveries 5. Shelf-stocking Rick Flair, the controller of Figure Four, wants to use this ABC system to examine individual customer profitability within each distribution market. He focuses first on the single-store distribution market and analyses data from two customers to experiment with the ABC approach. Data pertaining to these two customers in August 2012 are as follows: Charleston Pharmacy Chapel Hill Pharmacy Total orders Average line items per order Total store deliveries Average cartons shipped per store delivery 13 10 18 10 20 20 Average hours of shelf-stocking per store delivery 05 $1,800 Average revenue per delivery $2,400 Average cost of goods sold per delivery $2,000 $1,650 Required: a. Use the ABC information to compute the operating income from the two customers (Charleston Pharmacy and Chapel Hill Pharmacy) in August 2012 (4 marks)Step by Step Solution
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