QUESTION : Grand Designs plc sells three products: M, N and Q. It has one major customer, Greenwood plc, and also sells to wholesalers and local authority customers. Sales and cost data for the past month are as follows:

QUESTION 2 Grand Designs plc sells three products: M. N and Q. It has one major customer. Greenwood plc, and also sells to wholesalers and local authority customers. Sales and cost data for the past month are as follows: Sales M N 0 Total Customer 000 000 000 000 rou Greenwood 150 50 350 Wholesalers 150 300 550 Local authority m E Q Q Q 1 ,500 The variable cost of each product is 30 per cent of the gross sales price. Grand Designs gives a 15 per cent sales discount to Greenwood plc, wholesalers receive an average 5 per cent discount and local authorities an average of 2 per cent discount. Sales commission to the workforce is 10 per cent of sales after discount. Other costs are as follows. Fixed per month 000 Sales promotion costs: Greenwood 3 Wholesalers 15 Local authorities 18 Production xed costs 200 Administrative xed costs 70 Marketing salaries 80 Advertising 70 Distribution costs are semi-fixed, as follows. Monthly gross sales per client Up to 200,000 9 200,001 - 400,000 12 400,001 - 600,000 15 REQUIRED: a) Using the information above prepare a customer profitability statement based on specifically traceable (i.e., direct) costs. [8 marks] b) Comment on the information revealed by your statement. [10 marks] c) Indicate, with reasons, ways in which you might allocate the shared (i.e., overhead) costs. [12 marks]