Homework 1 ABC, wholesale, customer profitability. Veritek Wholesalers operates at capacity and sells furniture items to four department-store chains (customers). Mr. Veritek commented, We apply ABC to determine product-line profitability. The same ideas apply to customer profitability, and we should find out our customer profitability as well. Veritek Wholesalers sends catalogs to corporate purchasing departments on a monthly basis. The customers are entitled to return unsold merchandise within a six-month period from the purchase date and receive a full purchase price refund. Veritek has calculated the following activity rates:
	Overhead activities	Cost-Driver Rate
	Regular order processing	$ 30.00	per regular order
	Rush order processing	$ 150.00	per rush order
	Returned item processing	$ 15.00	per item sold
	Catalogs and customer support	$ 1,200.00	per customer
The following data were collected from last years operations:
	Operations data	Customer 1	Customer 2	Customer 3	Customer 4
	Gross sales	$ 40,000	$ 20,000	$ 110,000	$ 95,000
	Sales returns:
	Number of items	96	24	64	32
	Amount	$ 8,000	$ 3,000	$ 7,700	$ 9,000
	Number of orders
	Regular	30	140	55	100
	Rush	8	46	12	45
Required Customers pay the transportation costs. The cost of goods sold averages 75% of sales. Determine the contribution to profit from each customer last year. Comment on your solution. Do a single costing system and ABC system. Comment on findings