Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Number of orders Units per order Sales returns: Number of returns Total units returned Jerry, Incorporated 5 Kate Company 60 2,000 220 3 30 13 5 190 6 Number of sales calls Colleen sells its products at $290 per unit. The firm's gross margin ratio is 25%. Both Jerry and Kate pay their accounts promptly and no accounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30 months, the firm has determined the following activity costs: Activity Sales calls Deliveries Cost Driver and Rate $1,000 per visit 200 per order 440 per order Order processing 290 per return and $6 per unit returned 99,000 per month Sales returns Sales salary Required: 1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total cost for Colleen Company to service Jerry, Incorporated and Kate Company. 2. Compare the profitability of these two customers. correct

Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Number of orders Units per order Sales returns: Number of returns Total units returned Jerry, Incorporated 5 Kate Company 60 2,000 220 3 30 13 5 190 6 Number of sales calls Colleen sells its products at $290 per unit. The firm's gross margin ratio is 25%. Both Jerry and Kate pay their accounts promptly and no accounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30 months, the firm has determined the following activity costs: Activity Sales calls Deliveries Cost Driver and Rate $1,000 per visit 200 per order 440 per order Order processing 290 per return and $6 per unit returned 99,000 per month Sales returns Sales salary Required: 1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total cost for Colleen Company to service Jerry, Incorporated and Kate Company. 2. Compare the profitability of these two customers. correct

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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Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Number of orders Units per order Sales returns: Number of returns Total units returned Jerry, Incorporated 6 Kate Company 60 3,000 460 4 50 15 3 190 4 es Number of sales calls Colleen sells its products at $230 per unit. The firm's gross margin ratio is 25%. Both Jerry and Kate pay their accounts promptly and no accounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30 months, the firm has determined the following activity costs: Activity Sales calls Deliveries Cost Driver and Rate $800 per visit 280 per order. 440 per order Order processing 240 per return and $3 per unit returned 83,000 per month. Sales returns Sales salary Required: 1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total cost for Colleen…
A large retailer obtains merchandise under the credit terms of 3/10, net 40, but routinely takes 65 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's effective cost of trade credit? Assume a 365-day year. Do not round intermediate calculations. Round your answer to two decimal places. %
Can I please get help with this quesiton? The following income statement was drawn from the records of Joel Company, a merchandising firm: JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (2,000 units × $125) $250,000 Cost of goods sold (2,000 units × $65) (130,000) Gross margin 120,000 Sales commissions (10% of sales) (25,000) Administrative salaries expense (30,000) Advertising expense (20,000) Depreciation expense (24,000) Shipping and handling expenses (2,000 units × $1.00) (2,000) Net income $19,000 Required Reconstruct the income statement using the contribution margin format. Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Joel will earn if sales increase by 10 percent.
Griswold's, Incorporated (GI), began operations in January, selling inexpensive sunglasses to large retailers like Walgreens and other smaller stores. Assume the following transactions occurred during its first six months of operations. January 1 Sold merchandise to Walgreens for $29,000; the cost of these goods to GI was $20,100. February 12 Received payment in full from Walgreens. March 1 Sold merchandise to Bravis Pharmaco on account for $3,900; the cost of these goods to GI was $1,850. April 1 Sold merchandise to Tony's Pharmacy on account for $8,900. The cost to GI was $4,850. May 1 Sold merchandise to Anjuli Stores on account for $2,900; the cost to GI was $1,650. June 17 Received $6,950 on account from Tony's Pharmacy. Required: 1. Complete the following aged listing of customer accounts at June 30. 2. Estimate the Allowance for Doubtful Accounts required at June 30 assuming the following uncollectible rates: one month, 1 percent; two months, 5 percent; three months, 20 percent;…
Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Number of orders Units per order Sales returns: Number of returns. Total units returned. Number of sales calls Activity Sales calls Order processing Deliveries Sales returns Sales salary Colleen sells its products at $200 per unit. The firm's gross margin ratio is 25%. Both Jerry and Kate pay their accounts promptly and no accounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30 months, the firm has determined the following activity costs: Required 1 Required 2 Jerry, Inc. Kate Co. 5 1,000 Customer unit level costs: Required: 1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the total cost for Colleen Company to service Jerry, Inc. and Kate Co. 2. Compare the profitability of these two customers. Customer batch…
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A large retailer obtains merchandise under the credit terms of 2/15, net 30, but routinely takes 50 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's effective cost of trade credit? Assume a 365-day year. Do not round intermediate calculations. Round your answer to two decimal places.
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Hult Games buys electronic components for manufacturing from two suppliers, Milan Components and Dundee Parts. If the components are delivered late, the shipment to the customer is delayed. Delayed shipments lead to contractual penalties that call for Hult to reimburse a portion of the purchase price to the customer. During the past quarter, the purchasing and delivery data for the two suppliers showed the following. Milan Dundee Total Total purchases (cartons) 98,000 42,000 140,000 Average purchase price (per carton) $ 20.00 $ 22 $ 20.60 Number of deliveries 80 20…
A large retailer obtains merchandise under the credit terms of 3/10, net 40, but routinely takes 55 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's effective cost of trade credit? Assume a 365-day year. Do not round intermediate calculations. Round your answer to two decimal places.