Hello,

I'm having difficulty with Case Study #5-5, starting on page 22 of the attachment. I've also included the calc sheet I started as I'm stuck on question 2, which corresponds to my worksheet titled '5-3.2'. I suppose the same concern would also go for question #3.

So to clarify, I need answers or guidance for Case Study #5-5 (Harrison Products), questions #2 and 3.

Costs to SG&A Activities Entering Purchase Orders Commissions Shipping Activities Invoicing Cost to Make Sales Calls Checking Credit Samples, Catalog Info. Special Handling Charges Distribution Management Marketing, by Customer Type Advertising/Promotion Marketing Administrative Office Support Licenses, Fees TOTAL Shipping Sales Marketing $0 $85,360 $0 $15,520 $21,125 $0 $0 $0 $0 $46,560 $0 $0 $1,625 $0 $1,625 $0 $3,250 $0 $0 $7,760 $0 $0 $4,875 $0 $0 $0 $0 $0 $32,500 $155,200 $0 $0 $0 $0 $0 $0 $2,970 $0 $2,970 $0 $8,910 $14,850 $0 $0 $29,700 Other $6,850 $0 $10,275 $13,700 $6,850 $6,850 $0 $3,425 $0 $0 $0 $3,425 $13,700 $3,425 $68,500 Total Assigned Activities to Customer Type $92,210 Number of Units Sold $15,520 Number of Units Embroidered $31,400 Number of Units Dyed $13,700 Sales Volume Revenue $53,410 Number of Orders Received $6,850 Number of Shipments Made $4,595 Number of Invoices Sent $5,050 Accounts with Balance >60 Days $6,220 $7,760 $8,910 $23,150 $13,700 $3,425 $285,900 Revenues Orders Shipments Invoices Accounts with Balance >60 Days Customers (986 Total) Large Medium 100,250 5,959 20,536 $308,762 133 147 112 1 38.09% 2.18% 2.26% 2.00% 0.75% 0.81% Small 58,544 117,406 6,490 29,394 9,935 12,328 $183,744 $318,024 845 5,130 923 5,431 754 4,737 11 122 22.67% 13.83% 14.20% 13.46% 8.21% 15.62% Total Cost Large Entering Purchase Orders Commissions Shipping Activities Invoicing Cost to Make Sales Calls Checking Credit Samples, Catalog Info. Special Handling Charges Distribution Management Marketing, by Customer Type Advertising/Promotion Marketing Administrative Office Support Licenses, Fees TOTAL $92,210 $15,520 $31,400 $13,700 $53,410 $6,850 $4,595 $5,050 $6,220 $7,760 $8,910 $23,150 $13,700 $3,425 $285,900 39.24% 83.99% 83.54% 84.54% 91.04% 83.57% Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% $12,757 $15,520 $4,458 $1,844 n/a $562 $1,042 $1,010 $1,410 $1,759 $2,228 $5,090 $3,012 $3,425 $54,116 Source $77,446 Orders n/a $26,232 Shipments $11,583 Invoices n/a $6,237 AR > 60 Days $1,803 Revenues $4,040 20% Medium; 80% Small $2,441 Revenues $3,045 Revenues $6,683 25% Medium; 75% Small $9,146 # of Units Sold - Specials $5,413 # of Units Sold - Specials n/a $154,066 Large Revenue Regular Mid-Size Hand Special Total 276,200 41,842 42,798 $810,530 6,108 6,501 5,603 134 Medium Small $2,008 n/a $710 $274 $53,410 $51 $1,750 n/a $2,369 $2,956 n/a $8,913 $5,275 n/a $77,717 Unit Sales Regular Mid-Size Hand Special Total Price Cost Regular Mid-Size Hand Special Total Price Customizing Inking Dyeing Embroidery Total Price Total Cost Mfg Cost Customizing SG&A Total Cost Profit Total Per Customer 27,250 36,640 35,880 480 100,250 $3.60 $3.20 $2.55 $4.00 $1.19 $1.03 $0.89 $1.44 $0.0817 $0.1100 $1.2770 Medium 16,600 18,552 19,966 3,426 58,544 Large Small 10,550 10,308 95,954 594 117,406 Total 54,400 65,500 151,800 4,500 276,200 Medium Small 98,100 59,760 37,980 117,248 59,366 32,986 91,494 50,913 244,683 1,920 13,704 2,376 $308,762 $183,744 $318,024 Large 32,428 37,739 31,933 691 $102,791 Large 16,381 2,259 7,610 $26,249 Large Medium Small 19,754 12,555 19,109 10,617 17,770 85,399 4,933 855 $61,566 $109,426 Medium Small 9,566 1,093 8,288 $18,947 19,184 1,356 37,536 $58,076 Medium Small $102,791 $61,566 $109,426 $26,249 $18,947 $58,076 $77,717 $54,116 $154,066 $206,758 $134,628 $321,569 Large $102,004 $12,751 Medium Small $49,115 $319 -$3,544 -$4 Total 195,840 209,600 387,090 18,000 $810,530 Total 64,736 67,465 135,102 6,480 $273,783 Total 45,131 4,708 53,432 $103,271 Total $273,783 $103,272 $285,899 $662,954 Total $147,576 $150 53490 155350 285900 Harrison Products: Los Angeles Plant Harrison Products: Youngstown Plant Job # Job Size Minutes/1000 Volume Cost Operating Margin (@30%) Job # Job Size Minutes/1000 Volume Cost Operating Margin (@40%) 1 11,342 3.666 $12,476.20 $3,742.86 1 6,695 9.025 $6,695.00 $2,678.00 2 7,089 3.860 $7,797.90 $2,339.37 2 116,959 2.235 $116,959.00 $46,783.60 3 2,835 4.063 $3,118.50 $935.55 3 136,058 2.224 $136,058.00 $54,423.20 4 7,563 3.879 $8,319.30 $2,495.79 4 42,531 3.042 $42,531.00 $17,012.40 5 1,891 4.188 $2,080.10 $624.03 5 51,884 2.653 $51,884.00 $20,753.60 6 70,884 2.095 $77,972.40 $23,391.72 6 10,387 6.418 $10,387.00 $4,154.80 7 63,087 2.223 $69,395.70 $20,818.71 7 69,496 3.139 $69,496.00 $27,798.40 8 25,282 3.118 $27,810.20 $8,343.06 8 51,982 2.806 $51,982.00 $20,792.80 9 68,285 2.140 $75,113.50 $22,534.05 9 79,351 2.824 $79,351.00 $31,740.40 10 49,147 2.490 $54,061.70 $16,218.51 10 18,594 4.224 $18,594.00 $7,437.60 11 30,244 2.960 $33,268.40 $9,980.52 11 63,796 2.804 $63,796.00 $25,518.40 12 30,008 2.969 $33,008.80 $9,902.64 12 48,241 3.024 $48,241.00 $19,296.40 13 41,822 2.651 $46,004.20 $13,801.26 13 13,980 5.502 $13,980.00 $5,592.00 14 9,452 3.771 $10,397.20 $3,119.16 14 97,220 3.181 $97,220.00 $38,888.00 15 13,941 3.551 $15,335.10 $4,600.53 15 84,175 2.517 $84,175.00 $33,670.00 16 12,051 3.649 $13,256.10 $3,976.83 16 41,153 3.143 $41,153.00 $16,461.20 17 119,086 1.999 $130,994.60 $39,298.38 17 9,796 7.007 $9,796.00 $3,918.40 18 5,907 3.961 $6,497.70 $1,949.31 18 98,874 2.627 $98,874.00 $39,549.60 19 75,610 2.028 $83,171.00 $24,951.30 19 22,447 3.927 $22,447.00 $8,978.80 20 1,182 4.365 $1,300.20 $390.06 20 142,458 2.704 $142,458.00 $56,983.20 21 3,308 4.081 $3,638.80 $1,091.64 21 63,796 2.648 $63,796.00 $25,518.40 22 37,805 2.755 $41,585.50 $12,475.65 22 120,700 2.264 $120,700.00 $48,280.00 23 64,269 2.200 $70,695.90 $21,208.77 23 80,877 2.824 $80,877.00 $32,350.80 24 35,168 2.827 $38,684.80 $11,605.44 24 149,841 2.405 $149,841.00 $59,936.40 25 16,970 3.433 $18,667.00 $5,600.10 25 8,763 7.230 $8,763.00 $3,505.20 26 12,524 3.607 $13,776.40 $4,132.92 26 30,885 4.927 $30,885.00 $12,354.00 27 43,807 2.649 $48,187.70 $14,456.31 27 43,712 2.884 $43,712.00 $17,484.80 28 21,738 3.243 $23,911.80 $7,173.54 28 12,160 5.861 $12,160.00 $4,864.00 29 100,912 2.345 $100,912.00 $40,364.80 30 52,376 2.943 $52,376.00 $20,950.40 31 129,462 2.223 $129,462.00 $51,784.80 32 161,262 2.169 $161,262.00 $64,504.80 33 5,317 10.743 $5,317.00 $2,126.80 34 15,752 5.070 $15,752.00 $6,300.80 35 14,177 5.286 $14,177.00 $5,670.80 36 28,354 3.690 $28,354.00 $11,341.60 37 29,535 4.414 $29,535.00 $11,814.00 38 6,835 8.902 $6,835.00 $2,734.00 39 3,467 15.800 $3,467.00 $1,386.80 40 73,444 2.975 $73,444.00 $29,377.60 41 190,600 2.280 $190,600.00 $76,240.00 Harrison Products: Los Angeles Plant Harrison Products: Youngstown Plant Job # Job Size Minutes/1000 Volume Cost Operating Margin (@30%) 1 11,342 3.666 $12,476.20 $3,742.86 2 7,089 3.860 $7,797.90 $2,339.37 3 2,835 4.063 $3,118.50 $935.55 4 7,563 3.879 $8,319.30 $2,495.79 5 1,891 4.188 $2,080.10 $624.03 6 70,884 2.095 $77,972.40 $23,391.72 7 63,087 2.223 $69,395.70 $20,818.71 8 25,282 3.118 $27,810.20 $8,343.06 9 68,285 2.140 $75,113.50 $22,534.05 10 49,147 2.490 $54,061.70 $16,218.51 11 30,244 2.960 $33,268.40 $9,980.52 12 30,008 2.969 $33,008.80 $9,902.64 13 41,822 2.651 $46,004.20 $13,801.26 14 9,452 3.771 $10,397.20 $3,119.16 15 13,941 3.551 $15,335.10 $4,600.53 16 12,051 3.649 $13,256.10 $3,976.83 17 119,086 1.999 $130,994.60 $39,298.38 18 5,907 3.961 $6,497.70 $1,949.31 19 75,610 2.028 $83,171.00 $24,951.30 20 1,182 4.365 $1,300.20 $390.06 21 3,308 4.081 $3,638.80 $1,091.64 22 37,805 2.755 $41,585.50 $12,475.65 23 64,269 2.200 $70,695.90 $21,208.77 24 35,168 2.827 $38,684.80 $11,605.44 25 16,970 3.433 $18,667.00 $5,600.10 26 12,524 3.607 $13,776.40 $4,132.92 27 43,807 2.649 $48,187.70 $14,456.31 28 21,738 3.243 $23,911.80 $7,173.54 Job # Job Size Minutes/1000 Volume Cost Operating Margin (@40%) 1 6,695 9.025 $6,695.00 $2,678.00 2 116,959 2.235 $116,959.00 $46,783.60 3 136,058 2.224 $136,058.00 $54,423.20 4 42,531 3.042 $42,531.00 $17,012.40 5 51,884 2.653 $51,884.00 $20,753.60 6 10,387 6.418 $10,387.00 $4,154.80 7 69,496 3.139 $69,496.00 $27,798.40 8 51,982 2.806 $51,982.00 $20,792.80 9 79,351 2.824 $79,351.00 $31,740.40 10 18,594 4.224 $18,594.00 $7,437.60 11 63,796 2.804 $63,796.00 $25,518.40 12 48,241 3.024 $48,241.00 $19,296.40 13 13,980 5.502 $13,980.00 $5,592.00 14 97,220 3.181 $97,220.00 $38,888.00 15 84,175 2.517 $84,175.00 $33,670.00 16 41,153 3.143 $41,153.00 $16,461.20 17 9,796 7.007 $9,796.00 $3,918.40 18 98,874 2.627 $98,874.00 $39,549.60 19 22,447 3.927 $22,447.00 $8,978.80 20 142,458 2.704 $142,458.00 $56,983.20 21 63,796 2.648 $63,796.00 $25,518.40 22 120,700 2.264 $120,700.00 $48,280.00 23 80,877 2.824 $80,877.00 $32,350.80 24 149,841 2.405 $149,841.00 $59,936.40 25 8,763 7.230 $8,763.00 $3,505.20 26 30,885 4.927 $30,885.00 $12,354.00 27 43,712 2.884 $43,712.00 $17,484.80 28 12,160 5.861 $12,160.00 $4,864.00 29 100,912 2.345 $100,912.00 $40,364.80 30 52,376 2.943 $52,376.00 $20,950.40 31 129,462 2.223 $129,462.00 $51,784.80 32 161,262 2.169 $161,262.00 $64,504.80 33 5,317 10.743 $5,317.00 $2,126.80 34 15,752 5.070 $15,752.00 $6,300.80 35 14,177 5.286 $14,177.00 $5,670.80 36 28,354 3.690 $28,354.00 $11,341.60 37 29,535 4.414 $29,535.00 $11,814.00 38 6,835 8.902 $6,835.00 $2,734.00 39 3,467 15.800 $3,467.00 $1,386.80 40 73,444 2.975 $73,444.00 $29,377.60 41 190,600 2.280 $190,600.00 $76,240.00 Los Angeles Unit Selling Price Unit Mfgr Cost Direct Materials/Labor Factory Overhead Engineering Setups Machine Running Cost Per Unit Profit Margin Youngstown $1.40 $0.40 $0.10 $0.40 $0.50 $0.90 $0.50 $200.00 Chapter 05 - Activity-Based Costing and Customer Profitability Analysis Chapter 5 Activity-Based Costing and Customer Profitability Analysis Cases 5-1 5-2 5-3 5-4 5-5 Blue Ridge Manufacturing (Activity-Based Costing for Marketing Channels) Colombo Soft-Serve Frozen Yogurt: Using Activity Based Costing To Assess Channel/Customer Profitability Precision Paint Forest Hill Paper Company Harrison Products Readings 5-1: \"Activity-Based Costing and Predatory Pricing: The Case of the Petroleum Retail Industry\" by Thomas L Burton and John B MacArthur, Management Accounting Quarterly, (Spring 2003). The assignment of indirect costs in a volume-based costing system can lead to product-cost subsidizationovercost high-volume products and undercost low-volume products. Undercosted products can lead to the appearance of predatory pricing where it actually does not exist. This article focuses on a lawsuit brought against a major chain of retail motor fuel (gasoline) service centers for allegedly selling regular-grade gasoline below cost, as defined by state statutes. The defendant employed ABC analysis to support its position that it was not selling its regular gasoline below cost. After the ABC analysis was presented, the case was settled, and the judge lifted the initial injunction. Discussion Questions: 1. 2. 3. 4. What are product-cost subsidizations? What are possible consequences of product-cost subsidizations? List alternative approaches to assign costs in a gasoline service center. Identify cost hierarchy level groups in classifying activities at the retail level of a gasoline service center and give at least one example each. 5. What are overheads activity-cost pools pertaining to selling gasoline in a retail gasoline service center and what is the activity level for each of the cost pools? 6. Identify the activity drivers for overheads activity-cost pools identified in this study and explain the reasons for the selection? 7. List examples of gasoline-dispensing facilities for a gasoline service center and identify whether each of the facilities is a common or a gasoline grade-specific asset. 5-2: \"Activity-Based Benchmarking and Process ManagementManaging the Case of Cardiac Surgery\" by Bea Chiang, Management Accounting Quarterly (Fall 2002). Through a study of resource consumption, hospitals can get a more accurate picture of how practices are linked to cost. Blocher, Stout, Juras, Cokins: Cost Management 6/e 5-1 The McGraw-Hill Companies, Inc., 2013 Chapter 05 - Activity-Based Costing and Customer Profitability Analysis Discussion Questions: 1. Describe briefly hospital's costing system. 2. Describe steps in activity-based benchmarking for medical-care processes. 5-3 \"Using Activity Based Costing To Assess Channel/Customer Profitability\" by DeWayne L. Searcy, PhD., CMA, CPA, Management Accounting Quarterly (Winter 2004). This article explains how ABC was used by a firm (TEC) in the temporary employment industry to better identify the profitability of its service distribution channels and individual customers. Discussion Questions: 1. What are the four steps used in implementing ABC costing at TEC? 2. What are the activity consumption drivers that TEC has chosen for each of the three activities: filling work orders, hiring temporaries, and processing payroll? 3. Which customer channel is most profitable, clerical or industrial, and why? 4. Within the industrial channel, which class of customers is most profitable and why? 5. In the study of the four largest customers, which is the most profitable and why? 5-4 \"Cost System Redesign at a Medium-Sized Company\