Customer profitability, customer-cost hierarchy. Enviro-Tech has only two retail and two whole- sale customers. Information relating to each customer for 2017 follows (in thousands): Wholesale Customers Retail Customers North America South America Wholesaler Wholesaler Revenues at list prices Discounts from list prices Cost of goods sold Delivery costs Order processing costs $375,000 25,800 285,000 4,550 3,820 6,300 $590,000 47,200 510,000 6,710 Green Energy Global Power $175,000 8,400 144,000 2,230 2,180 2,620 $130,000 590 95,000 2,145 1,130 1,575 5,980 2,620 Cost of sales visit Enviro-Tech's annual distribution-channel costs are $33 million for wholesale customers and $12 million for retail customers. The company's annual corporate-sustaining costs, such as salary for top management and general-administration costs are $48 million. There is no cause-and-effect or benefits-received rela- tionship between any cost-allocation base and corporate-sustaining costs. That is, Enviro-Tech could save corporate-sustaining costs only if the company completely shuts down.
Customer profitability, customer-cost hierarchy. Enviro-Tech has only two retail and two whole- sale customers. Information relating to each customer for 2017 follows (in thousands): Wholesale Customers Retail Customers North America South America Wholesaler Wholesaler Revenues at list prices Discounts from list prices Cost of goods sold Delivery costs Order processing costs $375,000 25,800 285,000 4,550 3,820 6,300 $590,000 47,200 510,000 6,710 Green Energy Global Power $175,000 8,400 144,000 2,230 2,180 2,620 $130,000 590 95,000 2,145 1,130 1,575 5,980 2,620 Cost of sales visit Enviro-Tech's annual distribution-channel costs are $33 million for wholesale customers and $12 million for retail customers. The company's annual corporate-sustaining costs, such as salary for top management and general-administration costs are $48 million. There is no cause-and-effect or benefits-received rela- tionship between any cost-allocation base and corporate-sustaining costs. That is, Enviro-Tech could save corporate-sustaining costs only if the company completely shuts down.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
How might Enviro-Tech use the new cost information from its activity-based costing system to better manage its business?
Transcribed Image Text:Customer profitability, customer-cost hierarchy. Enviro-Tech has only two retail and two whole-
sale customers. Information relating to each customer for 2017 follows (in thousands):
Wholesale Customers
Retail Customers
North America
South America
Wholesaler
Wholesaler
Revenues at list prices
Discounts from list prices
Cost of goods sold
Delivery costs
Order processing costs
$375,000
25,800
285,000
4,550
3,820
6,300
$590,000
47,200
510,000
6,710
Green Energy Global Power
$175,000
8,400
144,000
2,230
2,180
2,620
$130,000
590
95,000
2,145
1,130
1,575
5,980
2,620
Cost of sales visit
Enviro-Tech's annual distribution-channel costs are $33 million for wholesale customers and $12 million for
retail customers. The company's annual corporate-sustaining costs, such as salary for top management
and general-administration costs are $48 million. There is no cause-and-effect or benefits-received rela-
tionship between any cost-allocation base and corporate-sustaining costs. That is, Enviro-Tech could save
corporate-sustaining costs only if the company completely shuts down.
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