Q3- It is one year later. Both your customers switched to activity-based pricing nine months ago and now exhibit the service consumption indicated in Table 3.

Under the ABP pricing system, customers are charged the following amounts:

- the manufacturers cost of the products (i.e., product sales),

- the customer-related costs (i.e., other costs and fixed costs), and

- ABP fees in the amount of

$5/EDI order

$10on-EDI order

$.75/line, $500/delivery

9% (per annum) interest on accounts receivable

$25/emergency order, and

$130/delivery for shipping and handling.

Draft new customer profitability statements for both Alpha Hospital and Beta Hospital under the new ABP system and based on the new service activity levels presented in Table 3 (after ABP implementation). Do this by filling in the last two columns of the template provided.

Table 3 - Activity Consumption [after ABP implementation] \begin{tabular}{l|c|c|} \hline & Alpha Hospital & Beta Hospital \\ \hline Activity Levels: & & \\ \hline orderimonth & 400 & 660 \\ \hline lines'month & 11000 & 20000 \\ \hline deliveriestmonth & 7 & 10 \\ \hline \%EDI orders & 95% & 95% \\ \hline account receivable & $5,000.00 & $150,000.00 \\ \hline cost-plus \% & 6 & 6 \\ \hline \end{tabular} Table 3 - Activity Consumption [after ABP implementation] \begin{tabular}{l|c|c|} \hline & Alpha Hospital & Beta Hospital \\ \hline Activity Levels: & & \\ \hline orderimonth & 400 & 660 \\ \hline lines'month & 11000 & 20000 \\ \hline deliveriestmonth & 7 & 10 \\ \hline \%EDI orders & 95% & 95% \\ \hline account receivable & $5,000.00 & $150,000.00 \\ \hline cost-plus \% & 6 & 6 \\ \hline \end{tabular}