HQ Drugs is a distributor of pharmaceutical products. Its ABC system has five activities:

$($Click the icon to view the activities.$)$

Requirement $1.$ Use the ABC information to compute the operating income of each customer in August $2020.$ Comment on the results and what, if anything, Flair should do

minus sign for operating losses.$)$

has a lower gross margin percentage and consumes

resources to obtain this lower margin.

Requirement $2.$ Flair ranks the individual customers in the Ma and Pa single$-$store distribution market on the basis of monthly

losses of $$18,290$ for the bottom $40\%$ of its customers. Make four recommendations that you think HQ Drugs should consider i

Pay

attention to the top $20\%$ of the customers.

Work out ways internally at $HQ$ Drugs to

the rate per cost driver.

Work with customers so that their behavior

the total "system$-$wide" costs.

Data table

More info

He focuses first on the Ma and Pa single$-$store distribution market. Using only two customers helps highlight

the insights available with the ABC approach. Data pertaining to these two customers in August $2020$ are

as follows: