Johnson Beverage sell to Retail store customers - about 20 customers Last year Revenue was $12 million - Sell Sport Drinks (Exhibit 1 Customer Profitability) Saver Oscars Superstore Odd Lots Net Revenue $1.168.000 $1.192.000 Cost of Goods Sold 1.048.000 1.048.000 Gross Profit 120.000 144.000 Customer Service Costs 116.800 119.200 Customer Profit 3.200 24.800 Profit 0.3% 2.1% Midwellon $121.520 104.800 16.720 12.1521 4.568 3.8% Downtown Retail $454.500 393.000 61.500 45.450 16.050 3.5% Others $9.063.980 7.886.200 1.177.780 906.398 271.382 3,0% Total JBI $12.000.00 10.480.00 1.520.00 1.200.0 320.00 2,7 Others Total JBI Midwellon 15,19 List price is $15.20 per case Cost is $13.10 per case Discounts vary by customer (Exhibit 2 Customer information) Saver Oscars Superstore Odd Lots Price per Case 14,6 14,9 Number of Cases 80.000 80.000 Number of Orders 16 40 Number of Deliveries 110 Miles per Delivery 5 19 Expedited Deliveries 10 250 Sales Visits 25 1.000 Downtown Retail 15.15 30.000 30 230 4 90 9 15,056 602.000 394 3.540 800.00 SE 20 400 200 11 2.020 296 2.5 3 18 Customer Service Cost Detail Cost Customer Saver Superstore is not happy - they think they are paying too much In addition to COGS Johnson has Customer Service costs of $1.2 million per year - like overhead See Table 1 Currently allocated based on % of revenue They Run a report of Profitability by Customer See Exhibit 1 Can you help them using Activity Based costing? Product Handling Taking Orders from Customers Delivering the Product Expediting Deliveries Sales visits Total 672.000 100.000 140.000 198.000 90.000 1.200.000 Inson Beverage sell to Retail store customers - about 20 customers at year Revenue was $12 million - Sell Sport Drinks Chibit Customer Profitability) Saver Oscars Superstore Odd Lots Revenue $1.168.000 $1.192.000 st of Goods Sold 1.041.000 1.048.000 oss Profit 120.000 144.000 stomer Service Costs 116.800 119.200 stomer Profit 3.200 24.800 ofit % 0.3% 2.1% Midwellon $121.520 104.800 16.720 12.152 4.568 3.8% Downtown Retail $454.500 393.000 61.500 45.450 16.050 3.5% Others $9.063.980 7.886.200 1.177.780 906.398 271.382 3,0% Total JBI $12.000.000 10.480.000 1.520.000 1.200.000 320.000 2,7% Others price is $15.20 per ease Cost is $13.10 per case counts vary by customer hibit 2 Customer information) Saver Oscars Superstore Odd Lots ce per Case 14,9 umber of Cases 80.000 80.000 mber of Orders 16 40 mber of Deliveries les per Delivery 5 19 edited Deliveries 10 250 es Visits 12 25 Downtown Retail 15.15 30.000 30 2.30 4 90 Midwellon 15,19 8.000 20 200 11 130 18 15,056 602.000 394 3.540 Total JBI 15 800.000 500 4.480 10 2.500 360 110 400 2.020 296 Customer Service Cost Detail stomer Saver Superstore is not happy - they think they paying too much addition to COGS Johnson has Customer Service costs 1.2 million per year - like overhead See Table 1 rrently allocated based on % of revenue Cost =y Run a report of Profitability by Customer Exhibit 1 Product Handling Taking Orders from Customers Delivering the Product Expediting Deliveries Sales visits Total 672.000 100.000 140.000 198.000 90.000 1.200.000
