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HQ Drugs Inc. is a distributor of pharmaceutical products. Its ABC system has five activities: BE: (Click the icon to view the activities.) Rick Flair,
HQ Drugs Inc. is a distributor of pharmaceutical products. Its ABC system has five activities: BE: (Click the icon to view the activities.) Rick Flair, the controller of HQ Drugs, wants to use this ABC system to examine individual customer profitability within each distribution market. He focuses first on the mom-and-pop single-store distribution market. Two customers are used to exemplify the insights available with the ABC approach. Data pertaining to these two customers in August 2018 are as follows: (Click the icon to view the customers' data.) Required Requirement 1. Use the ABC information to compute the operating income of each customer in August 2018. Comment on the results and what, if anything, Flair should do. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for operating losses.) Aboyne Pharmacy 1 Customers' data Revenues Cost of goods sold Gross margin Operating costs Aboyne Pharmacy Shilo Pharmacy Operating income (loss) i Activities Total orders Average line items per order Total store deliveries Average cartons shipped per store delivery Average hours of shelf-stocking per store delivery Average revenue per delivery Average cost of goods sold per delivery $ 0 2,500 $ 2,000 $ 0.75 1,800 1,600 Activity Area Cost Driver Rate in 2018 $ Print Done 1. Order processing 2. Line-item ordering 3. Store deliveries 4. Carton deliveries 55. Shelf-stocking $42 per order $3 per line item $50 per store delivery $5 per carton $19 per stocking-hour
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