Colleen Company has gathered the following data pertaining to activities it performed for two of its major customers.Number of ordersUnits per orderSales returns:Number of returnsTotal units returnedNumber of sales callsJerry,IncorporatedKateCompany6301,0004204550131405Colleen sells its products at $290 per unit. The firm's gross margin ratio is 20%. Both Jerry and Kate pay their accounts promptly andno accounts receivable is over 30 days. After using business analytics software to carefully analyze the operating data for the past 30months, the firm has determined the following activity costs:ActivitySales callsCost Driver and Rate$800 per visitOrder processingDeliveriesSales returnsSales salaryRequired:180 per order410 per order270 per return and $3 per unit returned107,000 per month1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level, etc.) and compute the totalcost for Colleen Company to service Jerry, Incorporated and Kate Company.2. Compare the profitability of these two customers.Complete this question by entering your answers in the tabs below.Required 1Required 2Compare the profitability of these two customers. (Loss amounts should be indicated by a minus sign. Round operatingmargin (loss) to 2 decimal places (i.e. 0.2134 should be entered as 21.34%).)

Profitability analysis is a financial analysis method used to evaluate the profitability of a…

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 6 30 Units per order 1,000 420 Sales returns: Number of returns 4 5 Total units returned 50 13 140 5 Number of sales calls 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 Required: Cost Driver and Rate $800 per visit 180 per order 410 per order 270 per return and $3 per unit returned 107,000 per month 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.

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 6 30 Units per order 1,000 420 Sales returns: Number of returns 4 5 Total units returned 50 13 140 5 Number of sales calls 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 Required: Cost Driver and Rate $800 per visit 180 per order 410 per order 270 per return and $3 per unit returned 107,000 per month 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.

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. Jerry, Incorporated Kate Company Number of orders 4 50 Units per order 3,000 160 Sales returns: Number of returns 2 5 Total units returned 40 120 Number of sales calls 14 3 Colleen sells its products at $280 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 Cost Driver and Rate Sales calls $600 per visit Order processing 240 per order Deliveries 480 per order Sales returns 270 per return and $6 per unit returned Sales salary 94,000 per month Required: 1. Using customers as the cost objects, classify the activity costs into cost categories (unit-level, batch-level,…
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