Customer profitability, distribution. Best Drugs is a distributor of pharmaceutical products. Its ABC system has five activities: Activity Area 1. Order processing 2. Line-item ordering Cost Driver Rate in 2017 $42 per order $5 per line item $47 per store delivery $4 per carton $13 per stocking-hour 3. Store deliveries 4. Carton deliveries 5. Shelf-stocking Rick Flair, the controller of Best Drugs, wants to use this ABC system to examine individual customer profit- ability within each distribution market. He focuses first on the Ma and Pa single-store distribution market. Using only two customers helps highlight the insights available with the ABC approach. Data pertaining to these two customers in August 2017 are as follows: Ann Arbor Pharmacy San Diego Pharmacy Total orders 13 Average line items per order 11 19 Total store deliveries 5 Average cartons shipped per store delivery Average hours of shelf-stocking per store delivery Average revenue per delivery Average cost of goods sold per delivery 21 18 0.5 0.75 $2,600 $2,100 $1,900 $1,700

Customer profitability, distribution. Best Drugs is a distributor of pharmaceutical products. Its ABC system has five activities: Activity Area 1. Order processing 2. Line-item ordering Cost Driver Rate in 2017 $42 per order $5 per line item $47 per store delivery $4 per carton $13 per stocking-hour 3. Store deliveries 4. Carton deliveries 5. Shelf-stocking Rick Flair, the controller of Best Drugs, wants to use this ABC system to examine individual customer profit- ability within each distribution market. He focuses first on the Ma and Pa single-store distribution market. Using only two customers helps highlight the insights available with the ABC approach. Data pertaining to these two customers in August 2017 are as follows: Ann Arbor Pharmacy San Diego Pharmacy Total orders 13 Average line items per order 11 19 Total store deliveries 5 Average cartons shipped per store delivery Average hours of shelf-stocking per store delivery Average revenue per delivery Average cost of goods sold per delivery 21 18 0.5 0.75 $2,600 $2,100 $1,900 $1,700

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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