Requirement 1. Use the ABC information to compute the operating income of each customer in August 2017. Comment on the results and what, if anything, Flair should do. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for operating losses.) Ann Arbor San Diego Pharmacy Pharmacy Revenues Cost of goods sold Gross margin Operating costs Operating income(loss) V has a lower gross margin percentage and consumes resources to obtain this lower margin. Requirement 2. Flair ranks the individual customers in the Ma and Pa single-store distribution market on the basis of monthly operating income. The cumulative operating income of the top 20% of customers is $58,120. Best Drugs reports operating losses of $23,670 for the bottom 40% of its customers. Make four recommendations that you think Best Drugs should consider in light of this new customer-profitability information. 1. Pay Vattention to the top 20% of the customers. More info 2. Work out ways internally at Best Drugs to the rate per cost driver. 3. Work with customers so that their behavior the total "system-wide" costs. He focuses first on the Ma and Pa single-store distribution market. Using only two customers helps highlight the insights available with the ABC approach. Data pertaining to these two customers in August 2017 are as follows: 4. Offer salespeople bonuses based on the of each customer rather than the gross margin of each customer. Ann Arbor Pharmacy San Diego Pharmacy 13 7 Data table 11 19 5 7 Total orders 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 21 18 0.5 0.75 Cost Driver Rate in 2017 $42 per order $5 per line item $ 2,600 $ 1,900 S 2,100 S 1,700 Activity Area 1. Order processing 2. Line-item ordering 3. Store deliveries 4. Carton deliveries 5. Shelf-stocking $47 per store delivery $4 per carton $13 per stocking-hour Activate Windows Go to Settings to activate Windows. Done Print