Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Five Star is a distributor of pharmaceuticals products. The cost management staffs have just completed a customer profitability analysis, at the request of the financial

image text in transcribedimage text in transcribed

Five Star is a distributor of pharmaceuticals products. The cost management staffs have just completed a customer profitability analysis, at the request of the financial controller, Mr Glen Brown. The following information forms the basis for analysis: Customer-driven activities Order processing Line-item ordering Store deliveries Carton deliveries Shelf-stocking Cost driver rate $40 per order $3 per line item $50 per store deliveries $1 per carton $16 per stocking hour Cost driver data for two of Five Star's major customers for September 2019 are as follows: Total orders Average line items per order Total store deliveries Average cartoons shipped per store delivery Average hours of shelf-stocking per store delivery Average revenue per delivery Average cost of goods sold per delivery Medinova Popular Pharmacy Pharmacy 13 10 9 18 7 10 22 0 0.5 $2,400 $1,800 $2,100 $1,650 20 Required: Question 4.1 Prepare a customer profitability analysis for both Medinova Pharmacy and Popular Pharmacy for March 2021 and Comment on the relative profitability of two customers. [Word limit for later part: 100 words. Note the word count at the end of your answer] (14 marks) Your Answer (Insert rows/columns and expand the space as required): Word count: Question 4.2 The sales manager is considering not selling products to unprofitable customer groups and focusing on profitable customer groups. Do you think the strategies outlined by the sales manager could lead to improved profitability? Explain your answer. (Word limit: 200 words. Note the word count at the end of your answer) (8 marks) Your Answer (expand the space as required): Word count = Question 4.3 Describe some other strategies that could be used to manage unprofitable customer groups and improve company profitability. [Word limit: 200 words. Note the word count at the end of your answer] (8 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Life Audit Workbook Meant For More

Authors: Agnese Iskrova

1st Edition

1716274958, 978-1716274954

More Books

Students also viewed these Accounting questions