Document4 as Review View Grammarly Tell me Question 3: (24 marks) Disney Forever is a toy producer and Wholesaler in Australia and New Zealand. The company has classified its customers to three categories: small, medium and large according to their sual ordersize or sales volume. Mickey Forever's management has started a relatively simple customer profitability analysis project. The following table show the results of the analysis project Small Medium Large $1,681,090 S1920,350 $3,000,000 $6,601,440 Direct costs of ales $924.594 $1.056.198 $1,800,000 $3,780.792 Use of product-related activities Number of orders received 96 Number of deliveries made 132 75 Total Sales revenue 54 192 Indirect costs and their cost drivers are defined in the table below: Estimated indirect costs Activity cost pool Cost driver Orders filling costs Number of orders Distribution-related costs Number of deliveries Marketing promotionales Sales dollars Administration clied costs Number of deliveries 5504,000 $1.002.000 $1,122.000 $552.720 Required: a. Using the activity analysis results, assign the activity costs to each of the three customer categories | mark Gick or tap here to rest 1. Calculate the profitability of each of the customer categories and drawn appropriate conclusion from your analysis. [10 marks Hint: conduct a certomter profitability analysis based on the above customer related indirect costs Gdzor tap here to entertext c. The management of Diary Forever is concerned about the increasing competition in the industry. They have knowledged that customer relationship management is very important for the company's growth. Advise the management on what critical strategie factors should be monitored in addition to the financial profitability analysis. /6 marks Cart here to enter test Question 2: (20 marks) Fyson company produces air-purifier fan C177 model. This model is the best seller with expected annual sales of 25,000 units. Each C117 fan has a thermostat component which enable the fan to automatically work upon a pre-set temperature. The company has always produced the thermostat component internally, but the general manager is considering purchasing this component from an external supplier. The purchase decision would climinate all variable costs but some of the fixed costs. Allocated costs will have to be absorbed by other production departments. Variable manufacturing costs to produce each thermostat component were: Direct materials per unit: $4.20 Direct labour per unit: Indirect labour per unit: Utilities per unit: $0.60 $2.80 $0.40 Fixed manufacturing costs to produce cach thermostat component were Cost item Direct Allocated Depreciation $3,000 $2,000 Property taxes $1,400 $600 Insurance $2,850 $1,350 Fyson currently receives an offer from Flurry Ltd. to purchase a similar thermostat component with the following information: 1. The lowest quotation for 25,000 units of thermostat component is $196,000 2. Freight and inspection costs would be $0.40 per unit, and receiving costs of $2,800 per year would be incurred by Fyson. 3. If the thermostat components are purchased on an ongoing basis, one of Fyson's manufacturing plants would be closed. The facilities would be rented out to produce a net income of $18,000 per year. 4. If the thermostat components are purchased on an ongoing basis, a machine operator from the plant will be transferred to the purchasing department (the employee's salary is $40,000) Required: a) Should Tyson Company continue to make the thermostat or purchase the part from the external supplier? Justify your answer with an appropriate incremental analysis. 14 marks/ Oick or tap here to entertext b) What other (non-financial factors should management consider in making this make-or-buy decision? /6 marks/ Gick or tap here to enter test
