I Problem 5-65Customer-Profitability Analy-sis, Activity-Based Costing(LO 5-9)Fresno Fiber Optics, Inc. manufactures fiber optic cables for the computer and telecommunicationsindustries. At the request of the company vice president of marketing, the cost management staff hasrecently completed a customer-profitability study. The following activity-based costing information wasthe basis for the analysis.1. Operating income, TraceTelecom: $7,000Chapter 5 ActivtyBased Costing and Management225Customer-Related ActivitiesCost Driver BaseCost Driver RateSales activitySales visits$1,000Order takingPurchese orders200Units handied.Special handing -Special shipping50Shipments500Cost-driver data for two of Fresno's customers for the most recent year areCustomer-Related ActivitiesTrace TelecomCaltex Computer8 visits6 vistsSales activity.Order taking15 orders20 ordersSpecial handing.800 units handled.600 unts handledSpecial shipping18 shipments20 shipmentsThe following additional information has been compiled for Fresno Fiber Optics for two of its cus-tomers, Trace Telecom and Caltex Computer, for the most recent year:Trace TelecomCaltex ComputerSales revenue.$190,000.$123,800Cost of goods soid.General seling costs80,000.62.00024,000.18,000General administrative costs19,000.16,000Required:1. Prepare a customer profitability analysis for Trace Telecom and Caltex Computer. (Hint: Refer toExhibit 5-13 for guidance.)2. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show howthe solution will change if the following information changes: Trace Telecom's sales revenue wasS185,000 and Caltex Computer's cost of goods sold was S59,000. Problem 5-63Better Bagels, Inc. manufactures a variety of bagels, which are frozen and sold in grocery stores. The Basic Elements of a Produc-production process consists of the following steps.tion Process; Non-Value-1. Ingredients, such as flour and raisins, are received and inspected. Then they are stored until needed. Added Costs(LO 5-7, 5-8, 5-10)2. Ingredients are carried on hand carts to the mixing room.3. Dough is mixed in 40-pound batches in four heavy-duty mixers.4. Dough is stored on large boards in the mixing room until a bagel machine is free.5. A board of dough is carried into the bagel room. The board is tipped, and the dough slides intothe hopper of a bagel machine. This machine pulls off a small piece of dough, rolls it into a cylin-drical shape, and then squeezes it into a doughnut shape. The bagel machines can be adjustedin a setup procedure to accommodate different sizes and styles of bagels. Workers remove theuncooked bagels and place them on a tray, where they are kept until a boiling vat is free.6. Next the trays of uncooked bagels are carried into an adjoining room, which houses three50-gallon vats of boiling water. The bagels are boiled for approximately one minute.7. Bagels are removed from the vats with a long-handled strainer and placed on a wooden board.The boards full of bagels are carried to the oven room, where they are kept until an oven rack isfree. The two ovens contain eight racks which rotate but remain upright, much like the seats on aFerris wheel. A rack full of bagels is finished baking after one complete revolution in the oven.When a rack full of bagels is removed from the oven, a fresh rack replaces it. The oven door isopened and closed as each rack completes a revolution in the oven.8. After the bagels are removed from the oven, they are placed in baskets for cooling.9. While the bagels are cooling, they are inspected. Misshapen bagels are removed and set aside.(Most are eaten by the staff.)10. After the bagels are cool, the wire baskets are carried to the packaging department. Here thebagels are dumped into the hopper on a bagging machine. This machine packages a half-dozenbagels in each bag and seals the bag with a twist tie.11. Then the packaged bagels are placed in cardboard boxes, each holding 24 bags. The boxes are placedon a forklift and are driven to the freezer, where the bagels are frozen and stored for shipment.Required:1. Identify the steps in the bagel-production process that fall into each of the following categories:process time, inspection time, move time, waiting time, storage time.2. List the steps in the production process that could be candidates for non-value-added activities.

Customer profitability analysis: It is the process to identify the cost incurred and benefits…

1. Prepare a customer profitability analysis for Trace Telecom and Caltex Computer. (Hint: Refer to Exhibit 5-13 for guidance.) 2. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: Trace Telecom's sales revenue was S185,000 and Caltex Computer's cost of goods sold was $59,000.

1. Prepare a customer profitability analysis for Trace Telecom and Caltex Computer. (Hint: Refer to Exhibit 5-13 for guidance.) 2. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: Trace Telecom's sales revenue was S185,000 and Caltex Computer's cost of goods sold was $59,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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