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Ruiz Wholesalers operates at capacity and sells furniture items to four department-store chains (customers). Mr. Ruiz commented, We apply ABC to determine product-line profitability. The
Ruiz Wholesalers operates at capacity and sells furniture items to four department-store chains (customers). Mr. Ruiz commented, "We apply ABC to determine product-line profitability. The same ideas apply to customer profitability, and we should find out our customer profitability as well." Ruiz Wholesalers sends catalogs to corporate purchasing departments on a monthly basis. The customers are entitled to return unsold merchandise within a six-month period from the purchase date and receive a full purchase price refund. The data that was collected from last year's operations and the activity rates Ruiz has calculated follow: (Click the icon to view the data.) (Click the icon to view the activity rates.) Customers pay the transportation costs. The cost of goods sold averages 80% of net sales. Requirement Determine the contribution to profit from each chain last year. Comment on your solution. Determine the contribution to profit from each chain last year. Begin by completing the statement through gross margin for each chain. Then calculate the customer related costs and the contribution margin (loss) for each chain. (Round your answers to the nearest whole number. Use parentheses or a minus sign when entering a contribution loss.) Data table Data table
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