Feather Light manufactures optic cables for telecommunications industry. The cost management staff have just completed a customer profitability analysis, at the request of the marketing manager. The following information forms the basis for the analysis:

Customer-driven activities

Cost driver

Cost driver rate $

Sales activity

Sales visits

$ 2000

Order taking

Purchase orders

500

Special handling

Units handled

50

Special shipping

Shipments

1000

Cost driver data for two of Feather Light's major customers for the recent year:

Customer-driven activities

Aydin

Zara

Sales activity

8 sales visits

6 sales visits

Order taking

15 purchase orders

20 purchase orders

Special handling

800 units handled

600 units handled

Special shipping

18 shipments

20 shipments

The following data relates to those same two customers:

Aydin $

Zara $

Sales revenue

$ 380 000

$ 247 600

Cost of goods sold

160 000

124 000

General selling costs

48 000

36 000

General administrative costs

38 000

32 000

Required:

1. Prepare a customer profitability analysis for Aydin and Zara. (10 marks)

2. Comment on the relative profitability of the two customers. (5 marks)