Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Colleen Company has gathered the following data pertaining to activities it performed for two of Its major customers. Jerry, Inc. Kate Co. 3 60 2,888

image text in transcribedimage text in transcribedimage text in transcribed

Colleen Company has gathered the following data pertaining to activities it performed for two of Its major customers. Jerry, Inc. Kate Co. 3 60 2,888 360 Number of orders Units per order Sales returns: Number of returns Total units returned Number of sales calls 1 5 148 9 Colleen sells its products at $290 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 $ 700 per visit 460 per order 180 per order 210 per return and $5 per unit returned 80,000 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. 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: 300 Customer batch level costs: S S 700 Customer sustaining costs: 6,300 6,600 $ 2.800 3,500 Total S 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. et sales S 0 S 0 S 0 S 0 Operating income (loss) Operating margin (loss) % %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions