Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Jerry, Inc. 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 3 1,000 Colleen sells its products at $190 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: 1 50 11 Required 1 Kate Co. 60 400 Required 2 5 130 3 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. Cost Driver and Rate $ 600 per visit 270 per order 180 per order 210 per return and $4 per unit returned 95,000 per month Complete this question by entering your answers in the tabs below. Compare the profitability of these two customers. (Loss amounts should be indicated by a minus sign. Round operating margin (loss) to 2 decimal places (i.e. .2134 should be entered as 21.34%).)
Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Jerry, Inc. 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 3 1,000 Colleen sells its products at $190 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: 1 50 11 Required 1 Kate Co. 60 400 Required 2 5 130 3 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. Cost Driver and Rate $ 600 per visit 270 per order 180 per order 210 per return and $4 per unit returned 95,000 per month Complete this question by entering your answers in the tabs below. Compare the profitability of these two customers. (Loss amounts should be indicated by a minus sign. Round operating margin (loss) to 2 decimal places (i.e. .2134 should be entered as 21.34%).)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers.
Jerry, Inc.
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
3
1,000
1
50
11
olleen sells its products at $190 per un 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:
Kate Co.
60
400
Required 1 Required 2
5
130
3
Cost Driver and Rate
$
600 per visit
270 per order
180 per order
210 per return and $4 per unit returned
95,000 per month
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.
Complete this question by entering your answers in the tabs below.
Compare the profitability of these two customers. (Loss amounts should be indicated by a minus sign. Round operating
margin (loss) to 2 decimal places (i.e. .2134 should be entered as 21.34%).)
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