Question 3. Ab Pharma is a distributor of pharmaceutical products. Its ABC system has five activities: Activity Order processing Line item ordering Store deliveries Carton deliveries Shelf-stocking Cost per unit of activity driver 540 per order $3 per line item $50 per store delivery 51 per carton $16 per hour Rick Flair, the controller of Ab Pharma, wants to use this ABC system, to examine individual customer profitability within each distribution market. He focuses first on the small single- store distribution market. Two customers are used to exemplify the insights available with the ABC approach. Data pertaining to these two customers in August are as follows: Bullcreek Scarborough Pharmacy Pharmacy 12 10 18 10 Total order Average line items per order Total store deliveries Average cartons shipped per store delivery Average hours of shelf-stocking per store delivery Average revenue per delivery Average cost of goods sold per delivery 10 6 24 0 20 0.5 $2,400 $2,100 $1,800 $1,650 Required: 1. Use the activity information to compute the operating income of each customer in August. Briefly comment on the results. (5 marks) 2. Flair ranks the individual customers in the small single-store distribution market on the basis of monthly operating income. The cumulative operating income of the top 20% of customers is $55,680. Ab Pharma reports operating losses of $21, 247 for the bottom 40% of its customers. Identify two ways Ab Pharma can use this new customer - profitability information when working with their customers. (4 marks)