Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please set up requirement 1 where it is easy to follow process for results Burtman-Tech has only two retail and two wholesale customers. Information relating

please set up requirement 1 where it is easy to follow process for results image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Burtman-Tech has only two retail and two wholesale customers. Information relating to each customer for 2017 follows (in thousands): (Click the icon to view the data) Burtman - Tech's annual distribution-channel costs are 841 million for wholesale customers and 56 milion for retail customers. The company's annual corporate-sustaining costs, such as salary for top management and general administration costs, are 362 million. There is no cause-and-effect or benefits-received relationship between any cost-allocation base and corporate-sustaining costs. That is, Burtman-Tech could save corporate-sustaining costs only if the company completely shuts down Read the r ements Read the requirements. Requirement 1. Calculate customer-level operating income. Begin by calculating each customer's gross margin. Then calculate the operating income for each customer. (Enter amounts in thousar All amounts in thousands of U.S. Dollars Wholesale Retail North America South America Green Global Wholesaler Wholesaler Energy Power Gross margin Choose from any list or enter any number in the input fields and then click. Check Answer A Data Table Energy Revenues at list prices Discounts from list prices Cost of goods sold Delivery costs Order processing costs Cost of sales visit Wholesale Customers North America South America Wholesaler Wholesaler 425,000 $ 570,000 $ 20,000 39,000 315,000 485,000 500 670 750 1.030 5,700 5,600 Retail Customers Green Global Power 150,000 $ 120,000 8,000 470 117,000 96,000 170 140 195 160 2.100 1,550 Done i Requirements 1. Calculate customer-level operating income. 2. Prepare a customer-cost hierarchy report. 3. Burtman-Tech's management decides to allocate all corporate-sustaining costs to distribution channels: $51 million to the wholesale channel and $11 million to the retail channel. As a result. distribution channel costs are now $92 million ($41 million + $51 million) for the wholesale channel and $17 million ($6 million + $11 million) for the retail channel. Calculate the distribution-channel-level operating income. On the basis of these calculations, what actions, if any, should Burtman - Tech's managers take? Explain. How might Burtman - Tech use the new cost information from its activity-based costing system to better manage its business

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting

Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren

23rd Edition

978-0324662962

More Books

Students also viewed these Accounting questions

Question

Compare and contrast a trade discount and a quantity discount.

Answered: 1 week ago

Question

What is the orientation toward time?

Answered: 1 week ago

Question

4. How is culture a contested site?

Answered: 1 week ago