Dakota Office Product (Case):

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 Services Provided to Customer A and Customer B 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 Profitability Analysis of Customer A and B 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