Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Montreal Manufacturing makes a component caled 2040. This component is inanufactured only when ardered by a customer, so Mississippi keeps no inventory of B2040. The
Montreal Manufacturing makes a component caled 2040. This component is inanufactured only when ardered by a customer, so Mississippi keeps no inventory of B2040. The list price is $110 per unit, but customers who place "large" orders receive a 14% discount on price. The customers are manufacturing fim. Currently, the salespeople decide whether an order s large enough to quality for the discount. When the product is finished, it is packed in cases af 10. the component rends to be exchanged or repaired, customers can come back within 14 days for free exchange or repair (Click the loon to view the data Click the icon to view the acties and cost drivers.) Read the recurements. Requirement 1. Calculate the customer-level operating income for these five customers. Use the format provided. Prepare a customer-profitability analysis by ranking the customers from moet to least profitable. Begin by calculating the customer-level operating income for these five customers. (For accounts with a $0 balance, make sure to enter in the appropriale cell Use parentheses or a ninus sign when entering operating losses.) B D E i Data Table Groes margin The ful cost of manufacturing a unit of B2040 18 588. In addition, Montreal incurs customer-level costs. Customer level cost driver rates are: i Data Table 5370 per order $13 per cage Order taking Product handling Rush-order processing Exchange and repair costs SGO0 per rush ander $65 per unit Information about Montreal's five biggest customers folowe. Customer C Print E Done 4.600 1,700 4,200 7,900 Number of units purchased Discounts given Number of ordere 1.500 0% 14% 14% 14% 14% on half the units 18 4 10 48 22 570 240 420 820 Number of cases Number of rush orders Number of units exchanged repaired 80 1 1 2 11 0 30 17 60 10 210 All customers except E ardered units in the same arder size. Customer Esorder quantity varied, so Egola discount part of the time but not all the time
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started