Exercise 5-35 Customer Profitability Analysis (LO 5-6] Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Jerry, Inc. Kate Co. 40 3,000 150 Number of orders Units per order Sales returns: Number of returns Total units returned Number of sales calls Colleen sells its products at $220 per unit. The firm's gross margin ratio is 30%. 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 $ 900 per visit 420 per order 100 per order 270 per return and $5 per unit returned 110,000 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. 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. $ 300 $ 950 Customer unit level costs: Sales return Customer batch level costs: Order processing Sales return Delivery $ 1,260 270 300 $ $ 16,800 1,080 4,000 Customer sustaining costs: Sales calls Total 10,800 12,930 3,600 26.430 $ $ 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. Sales Sales return $ 594,000 X $ (13,200) $ 580,800 7.920.000 $ (41,800) Net sales 7.878,200 Cost of goods sold $ 406,560 X 5,514.7408 Gross margin Sales support costs Operating income (loss) Operating margin (loss) $ 174,240 $ (12,930) $ 161,310 X 2,363,460 $ (26,430) 2,337,030 X 29.51 27.16 % %