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Go Bike Company Inc. produced 2 types of bikes, i.e. GoPro and GoHi. GoPro is a simple motorized bike while GoHi is a mountain bike.
Go Bike Company Inc. produced 2 types of bikes, i.e. GoPro and GoHi. GoPro is a simple motorized bike while GoHi is a mountain bike. Mr. Gow, the founder and owner of the company wants you, the business development manager of the company, to decide whether to deliver more services to GoPro or GoHi customers. Mr. Gow asks you to review the case from the standpoint of an Accountant as you have a background in Accounting. The following are the data provided by the company accountant: Activity Drivers Expected indirect costs Expected activity level Customer group actual activity level GoPro GoHi 50 50 500 100 Ordering stationaries Designing-parts adjustments Sponsoring activities 200 20 5 18 1,000 10 2 10 Required: 1. Calculate the indirect cost rates of each activity. [6 marks] 2. Use the indirect cost rate above to allocate the indirect costs to each group of customer. (11 marks] 3. Calculate the profit from each customer group if sales for GoPro predicted to be GBP 2,550 and GBP 3,000 for GoHi. [4 marks] 4. Advise Mr. Gow on which customer group that the company must focus. Provide the reason. [4 marks]
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