Exercise 11.11 External Linkages, Customer Costing, Customer Profitability Emery Company sells small machine parts to heavy equipment manufacturers f of the Curtis carburetor attrlou for an requent s that come in pro price of S1.05 per part. There are two types of customers: those who place small, freaver and those who place larger, less frequent orders. Each time an order is placed aent orders setup is required. Scheduling is also needed to coordinate the many different ore, a and place demands on the plant's manufacturing resources. Emery also inspects a sample f products each time a batch is produced to ensure that the customer's specifications have OBUECTIVE Exercis Assum variety met. Inspection takes essentially the same time regardless of the type of part being related activities and costs (the amounts expected for the coming year): most li three c whenev a. Ins b. Po c. Mi d. Sal e. Oil f. Sal g. Co h. Sal Emery's Cost Accounting Department has provided the following budgeted data for uu Less Frequently Ordering Customers 2,100 21,000 Frequently Ordering Customers 21,000 2,100 Sales orders Average order size Number of setups Scheduling hours Inspections Average unit cost* 36,750 26,250 5,250 5,250 $0.56 This cost does not include the cost of the following "customer-related" activities Customer-related activity costs J. Ta k. De Ra m. Sal n. Par Per p. Ins Ove Pla Processing sales orders Scheduling production Setting up equipment Inspecting batches $ 2,310,000 ,260,000 3,780,000 Total $12,390,000 Required 1. Assign the customer-related activity costs to each category of customers in propch cus sales revenue earned by each customer type. Calculate the profitability of eac type. Discuss the problems with this measure of customer profitability. proportion to the s. Ma