So my teacher got for sales was Sun Company was 196,000, Moon Company was 292,000, and Star Company was 245,000. How did he get this calculations from the given information. Is there a formula for Sales and COGS that deals with this data shown? I'm just confused. Most questions give you the sales and COGS. Thanks I need help please? ### Alexa Company Customer Analysis and Activity-Based CostingAlexa Company is a retail store specializing in selling a product called ZIP. The company purchases each ZIP unit at $6 and sells it for $10. Seventy-five percent (75%) of Alexa's total sales are made to three companies: Sun Company, Moon Company, and Star Company.Alexa's President has recently expressed interest in measuring the contribution of each of these three major customers to the company's profit for public relations and customer relations purposes. During a recent managers' meeting, two proposals were made for allocating the store’s operating expenses. (Note that Alexa is a merchandising company, so there is no factory overhead to allocate, and all costs of goods sold are variable and directly traceable.)**Proposal 1: Allocation Based on Sales Revenue**One manager suggested that total operating expenses should be allocated among the companies based on their sales revenues. Last month's total sales were $1,000,000 and total operating expenses were $135,000. The rate proposed for allocation would be 13.5% (calculated as $135,000 / $1,000,000 = 13.5% of total sales dollars).**Proposal 2: Activity-Based Costing Approach**Lisa, a recently hired manager and graduate of CSU, raised concerns about the suggested approach, asserting that operating support services provided to each customer may not be uniform. She suggested utilizing the Activity-Based Costing (ABC) method for allocating operating expenses among the three major customers. ### Last Month’s Sales Information for Major Customers Below is a summary of last month's sales information for each of the three companies:| | Sun Company | Moon Company | Star Company ||----------------------|-------------|--------------|--------------|| Number of orders | 40 | 30 | 25 || Number of units per order | 500 | 1000 | 1000 || Total units sold | 20,000 | 30,000 | 25,000 |Lisa performed a detailed analysis of the total operating expenses for the last month, breaking it down into four activities, and developed a formula to represent the structure of each activity cost. This detailed activity-based costing approach will provide a more accurate allocation of operating expenses according to the specific demands each customer places on the company's resources. Further details and analysis of Lisa's formula will contribute to a more precise understanding of the cost structure per customer ### Understanding Customer Profitability Analysis**Activity Cost Drivers and Rates:**- **Sales Calls:** $400 per visit- **Order Processing:** $200 per order plus $0.30 per unit- **Deliveries:** $100 per order plus $0.50 per mile- **Handling Sales Returns:** $60 per return and $3 for restocking each returned unit**Data for Activities Performed for Each Major Customer:**1. **Sun Company:** - Number of sales calls: 30 - Number of orders: 40 - Number of units per order: 500 - Miles to be driven per delivery: 40 - Sales returns: - Number of returns: 12 - Total units returned: 4002. **Moon Company:** - Number of sales calls: 40 - Number of orders: 30 - Number of units per order: 1000 - Miles to be driven per delivery: 80 - Sales returns: - Number of returns: 10 - Total units returned: 8003. **Star Company:** - Number of sales calls: 32 - Number of orders: 25 - Number of units per order: 1000 - Miles to be driven per delivery: 50 - Sales returns: - Number of returns: 7 - Total units returned: 500**Objective:**Your team has been hired to perform a Customer Profitability Analysis. This analysis compares what was earned from a given customer versus what was spent.**Requirements:**1. **Customer Profitability Analysis:** Analyze the three major customers of Alexa Company by allocating operating expenses based upon sales revenues among customers.2. **Template for Analysis:** Complete the following table with the appropriate financial data to understand the profitability of each customer: | | Sun Company | Moon Company | Star Company | |------------------------|-------------|--------------|--------------| | **Sales** | | | | | **Costs of Goods Sold (CGS)** | | | | | **Gross Profit** | | | | | **Operating Expenses** | | | | | **Operating Income/Profit Margin** | | | | |

The computation for sales revenue is computed by multiplying the net sales units by the total units…

Data for the next 3 questions: Alexa Company is a retail store specialized in selling a product called ZIP. Alexa buys each ZIP at $6 each and sells each ZIP at $10 per unit. Seventy-five (75%) of Alexa's total sales are made to three companies - Sun Company, Moon Company, and Star Company. Alexa's President has become interested in measuring the contribution of each of its three major customers to the profit of the company for the purpose of PR and customer relations. During a recent meeting of the managers, two proposals were made for the allocation of store's operating expenses (Please note that, since this a merchandising company, there is no factory overhead to be allocated and all of cost of goods sold is variable and traceable-direct cost). One of the managers in the meeting suggested that total operating expenses to be allocated among companies based on sales revenues. Total sales for last month was $1,000,000 and total operating expenses were $135,000. The rate would be 13.5% (135000/1000000= 13.5% of sales dollars. Makes this a plant-wide rate). Lisa, a recently hired manager (graduate of CSU) raised concern about the suggested approach claiming that the operating support services provided to each customer may not be the same. She suggested use of Activity Based Costing method for the allocation of operating expenses among the three major customers. The following data summarizes last month's sales information to each of the three companies: Number of orders placed by company Number of units per order Total units sold Sun Company Moon Company Star Company 25 1000 25,000 40 500 20,000 30 1000 30,000 Lisa was able to analyze total operating expenses for the last month, break it into four activities, and develop a formula representing the structure of each activity cost as follows:

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q