Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

This is all the information I was presented with. 1. 2. Use the ABC information to compute the operating income of each customer in August

image text in transcribedimage text in transcribedimage text in transcribed

This is all the information I was presented with.

1. 2. 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. 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 $27,060 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. More Info 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: Albany Pharmacy Charleston Pharmacy Total orders 13 9 10 15 Average line items per order Total store deliveries Average cartons shipped per store delivery 7 8 18 19 Print Done Data Table Activity Area Cost Driver Rate in 2017 $44 per order 1. Order processing 2. Line-item ordering 3. Store deliveries 4. Carton deliveries 5. Shelf-stocking $4 per line item $48 per store delivery $2 per carton $14 per stocking-hour Print Done 1. 2. 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. 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 $27,060 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. More Info 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: Albany Pharmacy Charleston Pharmacy Total orders 13 9 10 15 Average line items per order Total store deliveries Average cartons shipped per store delivery 7 8 18 19 Print Done Data Table Activity Area Cost Driver Rate in 2017 $44 per order 1. Order processing 2. Line-item ordering 3. Store deliveries 4. Carton deliveries 5. Shelf-stocking $4 per line item $48 per store delivery $2 per carton $14 per stocking-hour Print Done

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions