Question 3 Activity Sales order processing Sales visits Normal delivery costs Special (urgent) deliveries Credit collection costs $300 $200 $1 $500 10% Cost driver per sales order per sales visits per delivery kilometre travelled per special delivery per annum on average payment time Details relating to four of the firm's customers are as follows: Customer A B D Number of sales orders 200 100 50 30 Number of sales visits 20 10 5 5 Kilometres per delivery 300 200 100 50 Number of deliveries 100 50 25 25 Total delivery kilometres 30,000 10,000 2.500 1.250 Special (urgent) deliveries 20 5 0 0 Average collection period (days) 90 30 10 10 Annual sales 1.000.000 1.000.000 500,000 2.000.000 Annual operating profit contribution 90000 120000 70000 200000 *consists of sales revenues less variable cost of sales Required: a) Prepare a customer profitability report using an ABC approach and rank the customers based on their profitability b) List some factors that contributed high cost and expected loss of any customers based on the analysis