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Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Jerry, Inc. Kate Co. 6 60 2,000
Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Jerry, Inc. Kate Co. 6 60 2,000 340 Number of orders Units per order Sales returns: Number of returns Total units returned Number of sales calls 40 12 6 150 3 Colleen sells its products at $200 per unit. The firm's gross margin ratio is 20%. Both Jerry and Kate pay their accounts promptly and no accounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30 months, the firm has determined the following activity costs: Activity Sales calls Order processing Deliveries Sales returns Sales salary Cost Driver and Rate $ 800 per visit 390 per order 140 per order 220 per return and $6 per unit returned 107,000 per month Required: 1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total cost for Colleen Company to service Jerry, Inc. and Kate Co. 2. Compare the profitability of these two customers. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total cost for Colleen Company to service Jerry, Inc. and Kate Co. Jerry Inc. Kate Co. Customer unit level costs: $ 240 $ 900 Customer batch level costs: Customer sustaining costs: 9,600 9,840 $ 2,400 3,300 Total $ Required 1 Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compare the profitability of these two customers. (Loss amounts should be indicated by a minus sign. Round operating margin (loss) to 2 decimal places (i.e. .2134 should be entered as 21.34%).) Jerry Inc. Kate Co. Net sales $ 0 $ 0 0 $ 0 Operating income (loss) Operating margin (loss) % %
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