Medivet distributes medical supplies to veterinary clinics. For years, Medivet used 12% markup on cost of goods sold to determine the selling prices.

Mike, the new COO, noted that profitability has been declining in the last few years. Mike suggested implementing an ABC system to help improve understanding of customer profitability. Mike asked the company accountant to classify the relevant common selling and administrative expenses into four activities, as shown below:

Activity Cost Pool	Activity Measure	Total Cost	Total Activities
Manual order processing	Number of manual orders	$200,000	3,200 orders
Electronic order processing	Number of electronic orders	$ 100,000	15,000 orders
Customer deliveries	Number of deliveries	$ 600,000	6,000 deliveries
Line item picking	Number of line items picked	$ 80,000	4,000 line items

Mike has gathered data on two customers clinics: Jim and Colin. It happens that sales for both clinics were $39,200 in the year 20X1.

Activity Measure	JIM	COL
Number of manual orders	-	40
Number of electronic orders	20	-
Number of deliveries	10	18
Number of line items picked	40	90

Mike asks your assistance to determine the customer margin for Jim and Colin using ABC costing and for your recommendations on how to increase company profitability.