uality Supply is a distributor of pharmaceutical products. Its ABC system has five activities: (Click the icon to view the activities.) Rick Flair, the controller of Quality Supply, wants to use this ABC system to examine individual customer profitability within each distribution market. (Click the icon to view additional information.) Read the requirements. Activity Area 1. Order processing 2. Line-item ordering 3. Store deliveries 4. Carton deliveries 5. Shelf-stocking Cost Driver Rate in 2020 $41 per order $6 per line item $55 per store delivery $5 per carton $12 per stocking-hour 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 2020 are as follows: 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 San Diego Pharmacy Buffalo Pharmacy 14 12 6 15 8 10 21 22 0.50 0.25 10 2,300 $ 1,750 $ 2,000 $ 1,600 1. Use the ABC information to compute the operating income of each customer in August 2020. Comment on the results and what, if anything, Flair should do. 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 $54,230. Quality Supply reports operating losses of $19,530 for the bottom 40% of its customers. Make four recommendations that you think Quality Supply should consider in light of this new customer-profitability information. Requirement 1. Use the ABC information to compute the operating income of each customer in August 2020. 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.) Revenues Cost of goods sold Gross margin Operating costs Operating income(loss) San Diego Pharmacy