Question
Dakota Office Product (Case): Based on the Dakota Office Product case, following information is give: Services Provided to Customer A and Customer B Particulars Customer
Dakota Office Product (Case): Based on the Dakota Office Product case, following information is give:
Particulars | Customer A | Customer B |
No. of cartons ordered | 200 | 200 |
No. of cartons shipped (commercial freight) | 200 | 150 |
No. of desktop deliveries | 25 | |
No. of manual orders | 6 | 100 |
No. of line items (manual) | 60 | 180 |
No. of EDI orders | 6 | |
Average Account Receivables | 9,000 | 30,000 |
Particulars | Customer A | Customer B |
Sales | 103,000 | 104,000 |
Cost of items purchased | 85,000 | 85,000 |
Gross Margin | 18,000 | 19,000 |
Cost of processing cartons | 10,400 | 10,400 |
Cost of shipping cartons (commercial freight) | 1,200 | 900 |
Cost of shipping cartons (desktop delivery) | 5,500 | |
Cost of processing orders (manual) | 60 | 1,000 |
Cost of entering line items (manual orders) | 240 | 720 |
Cost of processing EDI orders | 30 | |
Interest cost on average account receivables | 900 | 3,000 |
Profit from customers | 5,170 | -2,520 |
1.How much interest rate (per annum) should DOP charge from Customer B on the account receivables of $30,000 in order to achieve a profit of $0;
2.What will be the profit for DOP from Customer B if all its cartons are shipped via commercial freight;
3.The per unit cost of processing EDI orders divided by the per unit cost of processing orders manually is;
4.What will be the profit from Customer A if DOP is not incurring any interest cost on its accounts receivables;
5. In relation to the costs incurred by DOP, which activity accounts for the biggest absolute difference between Customer A and Customer B?
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