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Please, do the below case and show all the calculation in details Al Ain Bottled Water Distributors, sells cases (24) bottled water. It has two
Please, do the below case and show all the calculation in details
Al Ain Bottled Water Distributors, sells cases (24) bottled water. It has two distributing channels: 1. A wholesale distribution channel, in which the company sells directly to supermarkets, drug stores and other stores and 2. A retail distribution channel in which the company sells to a small number of business customers such as local hotels. Considering the retail distribution channel, management wants to develop an Activity Based Costing analysis to determine which customers are the more profitable ones The retail selling price for a case of 24 bottles of water is The cost of a case of water to Al Ain Distributors is If every case of water is sold at list price. Al Ain Distributors would earn a gross margin of The management tracked the costs incurred in supplying four of the ten Al Ain Distributor's customers in the month of June 2014 52 AED 43 9 AED J 2,500 52 Cases Sold List Selling Price Price Discount Invioice Price Revenue CUSTOMER B 33,000 52 5 47 1,551,000 A 42,000 52 7 45 1,890,000 G 2,900 52 6 46 133,400 0 52 130,000 Management then began to cost some of the indirect activities incurred such as the costs incurred to 1) handle the product 2) taking and processing orders, 3)make deliveries, 4) Make rush deliveries and 5) making special visits to customers at the customer request. Activity Product handling Order Taking Delivery vehicles Rush Deliveries Visits to Customers Cost Driver Number of Cases No. of purchase orders No. of Kilometres No. of rush deliveries No. of visits Estimated Annual Costs in AED 450,000 200000 900,000 210000 110000 Expected Use of Cost Driver 900,000 600 250000 250 500 Acitivity Costs Rate 0.5 333 3.6 AED per case AED per order AED per kilometre AED per rush delivery AED per vist 840 220 Next, management keep track of Information on the quantity of cost drivers used by each of the four customers in the month of June are as follows Next, management keep track of Information on the quantity of cost drivers used by each of the four customers in the month of June are as follows CUSTOMER A B G J 25 No. of purchase orders Number of deliveries No. of kms/ delivery No. of rush deliveries No. of sales visits 30 60 5 30 12 0 5 15 20 20 2 4 10 15 6 0 3 1 6 Customer Profitability Analysis CUSTOMER B A G J Revenues Cost of Goods Sold Gross Margin Indirect Costs Product handling Order Taking Delivery costs Rush Delivery Costs Visits to Customer Total Indiect cost per customer Cusomer Operating Income
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