Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Jerry, Incorporated Kate Company Number of orders Units per order sales returns: Number of returns Total units returned Number of sales calls. 3 2,000 60 360 1 60 5 140 4 Colleen sells its products at $290 per unit. The firm's gross margin ratio is 20%. 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 Order processing Deliveries Sales returns Sales salary Cost Driver and Rate $ 700 per visit 460 per order 100 per order 210 per return and $5 per unit returned 80,000 per month Complete this question by entering your answers in the tabs below. Required 1 Required 2 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. Jerry, Incorporated Kate Company Customer unit level costs: Customer batch level costs: Order processing $ 460 $ 2,300 Delivery $ 300 $ 6,000 Sales returns $ 510 $ 1,750 Customer sustaining costs: Total $ 1,270 $ 10,050 < Previous Required 2 > Required 1 Required 2 Compare the profitability of these two customers. Note: Loss amounts should be indicated by a minus sign. Round operating margin (loss) to 2 decimal places (i.e. 0.2134 should be entered as 21.34%). Sales Jerry, Incorporated $ 1,740,000 Kate Company $ 6,264,000 Net sales 1,740,000 6,264,000 Gross margin 1,740,000 6,264,000 Operating income (loss) Operating margin (loss) 25.00% 25.00% < Previous Required 2 >
Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers. Jerry, Incorporated Kate Company Number of orders Units per order sales returns: Number of returns Total units returned Number of sales calls. 3 2,000 60 360 1 60 5 140 4 Colleen sells its products at $290 per unit. The firm's gross margin ratio is 20%. 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 Order processing Deliveries Sales returns Sales salary Cost Driver and Rate $ 700 per visit 460 per order 100 per order 210 per return and $5 per unit returned 80,000 per month Complete this question by entering your answers in the tabs below. Required 1 Required 2 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. Jerry, Incorporated Kate Company Customer unit level costs: Customer batch level costs: Order processing $ 460 $ 2,300 Delivery $ 300 $ 6,000 Sales returns $ 510 $ 1,750 Customer sustaining costs: Total $ 1,270 $ 10,050 < Previous Required 2 > Required 1 Required 2 Compare the profitability of these two customers. Note: Loss amounts should be indicated by a minus sign. Round operating margin (loss) to 2 decimal places (i.e. 0.2134 should be entered as 21.34%). Sales Jerry, Incorporated $ 1,740,000 Kate Company $ 6,264,000 Net sales 1,740,000 6,264,000 Gross margin 1,740,000 6,264,000 Operating income (loss) Operating margin (loss) 25.00% 25.00% < Previous Required 2 >
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter21: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 2P: Medwig Corporation has a DSO of 17 days. The company averages 3,500 in sales each day (all customers...
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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,
Incorporated Kate Company
Number of orders
Units per order
sales returns:
Number of returns
Total units returned
Number of sales calls.
3
2,000
60
360
1
60
5
140
4
Colleen sells its products at $290 per unit. The firm's gross margin ratio is 20%. 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
Order processing
Deliveries
Sales returns
Sales salary
Cost Driver and Rate
$ 700 per visit
460 per order
100 per order
210 per return and $5 per unit returned
80,000 per month
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
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.
Jerry,
Incorporated
Kate Company
Customer unit level costs:
Customer batch level costs:
Order processing
$
460 $
2,300
Delivery
$
300 $
6,000
Sales returns
$
510 $
1,750
Customer sustaining costs:
Total
$
1,270 $
10,050
< Previous
Required 2 >
Required 1 Required 2
Compare the profitability of these two customers.
Note: Loss amounts should be indicated by a minus sign. Round operating margin (loss) to 2 decimal places (i.e. 0.2134
should be entered as 21.34%).
Sales
Jerry,
Incorporated
$ 1,740,000
Kate Company
$ 6,264,000
Net sales
1,740,000
6,264,000
Gross margin
1,740,000
6,264,000
Operating income (loss)
Operating margin (loss)
25.00%
25.00%
< Previous
Required 2 >
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