Exhibit 5–14 Patio Grill Company - Excel Customer-Profitability Analysis with Customers Ranked by Operating Income: Patio Grill Company FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign in E25 A B F Cumulative 2 3-Digit Customer Customer Customer Cumulative Operating Income Operating Income 3 Customer Patío Gríll as a % of Total Operating Income Sales Gross Operating 4 Code Revenue Margin Income company 6. 112 $ 6,500,000 $ 1,610,000 $ 378,530 $ 378,530 8.8% 7 108 6,964,000 1,570,000 370,000 748,530 17.3% 8. 114 6,694,000 1,484,300 351,000 1,099,530 25.5% 9 116 5,846,000 1,461,600 340,000 1,439,530 33.4% 10 110 5,602,000 1,430,000 336,070 1,775,600 41.1% 11 121 5,400,000 1,413,000 331,000 2,106,600 48.8% 2,436,600 2,736,600 12 124 5,601,000 1,405,520 330,000 56.5% 13 127 5,090,000 1,280,020 300,000 63.4% 14 128 4,760,000 1,160,200 281,400 3,018,000 69.9% 15 125 5,000,200 1,181,000 276,000 3,294,000 76.3% 16 135 4,431,000 1,150,000 270,000 3,564,000 82.6% 17 133 4,008,000 1,059,800 251,400 3,815,400 88.4% 18 113 4,490,000 1,110,000 219,920 4,035,320 93.5% 19 111 4,200,000 875,220 205,000 4,240,320 98.2% 20 106 4,320,000 1,100,000 199,300 4,439,620 102.9% 21 136 1,920,000 351,200 82,000 4,521,620 104.8% 22 137 1,641,000 139,400 35,600 4,557,220 105.6% 23 107 3,480,000 670,000 (19,050) 4,538,170 105.1% (102,600) (119,200)| 4,435,570 4,316,370 24 134 2,820,000 582,000 102.8% 25 119 1,960,000 480,000 100.0% 28 Cust Prof Analysis All by Opine READY 145% Exhibit 5-15 Cumulative Operating Income as a Percentage of Total Operating Income Customer-Profitability Pro- file in Terms of Cumulative Operating Income as a Per- centage of Total Operating Income: Patio Grill Company 110 100 90 Patío Gríll 80 75% of actual company operating income 70 60 50% of actual 50 operating income 40 30 25% of actual 20 operating income 10 Customers* *Customers ranked by operating income. 112 - F 80L 116- -0- 121 - 124 E SEL F EL FEL 111 - F90L

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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Question

The customer-profitability analysis for Patio Grill Company, which is displayed in Exhibit 5–14, ranks customers by operating income. An alternative, often-used approach is to rank customers by sales revenue.
Required:
1. List the customer numbers in the left-hand column of Exhibit 5–14 by sales revenue, from highest to lowest. Is the ranking different from that in Exhibit 5–14?
2. Patio Grill Company’s smallest customers, in terms of sales revenue, are last in the listing prepared for requirement (1). Are these customers the company’s least profitable?
3. Would the customer-profitability profile in Exhibit 5–15 be different if the customers were ranked by sales revenue instead of operating income? Explain.
4. What factors could cause a larger customer (in terms of sales revenue) to be less profitable than a smaller customer?

Exhibit 5–14
Patio Grill Company - Excel
Customer-Profitability
Analysis with Customers
Ranked by Operating
Income: Patio Grill Company
FILE
HOME
INSERT
PAGE LAYOUT
FORMULAS
DATA
REVIEW
VIEW
Sign in
E25
A
B
F
Cumulative
2
3-Digit
Customer
Customer
Customer
Cumulative Operating Income
Operating
Income
3 Customer
Patío Gríll
as a % of Total
Operating Income
Sales
Gross
Operating
4
Code
Revenue
Margin
Income
company
6.
112
$ 6,500,000 $
1,610,000 $
378,530 $
378,530
8.8%
7
108
6,964,000
1,570,000
370,000
748,530
17.3%
8.
114
6,694,000
1,484,300
351,000
1,099,530
25.5%
9
116
5,846,000
1,461,600
340,000
1,439,530
33.4%
10
110
5,602,000
1,430,000
336,070
1,775,600
41.1%
11
121
5,400,000
1,413,000
331,000
2,106,600
48.8%
2,436,600
2,736,600
12
124
5,601,000
1,405,520
330,000
56.5%
13
127
5,090,000
1,280,020
300,000
63.4%
14
128
4,760,000
1,160,200
281,400
3,018,000
69.9%
15
125
5,000,200
1,181,000
276,000
3,294,000
76.3%
16
135
4,431,000
1,150,000
270,000
3,564,000
82.6%
17
133
4,008,000
1,059,800
251,400
3,815,400
88.4%
18
113
4,490,000
1,110,000
219,920
4,035,320
93.5%
19
111
4,200,000
875,220
205,000
4,240,320
98.2%
20
106
4,320,000
1,100,000
199,300
4,439,620
102.9%
21
136
1,920,000
351,200
82,000
4,521,620
104.8%
22
137
1,641,000
139,400
35,600
4,557,220
105.6%
23
107
3,480,000
670,000
(19,050)
4,538,170
105.1%
(102,600)
(119,200)|
4,435,570
4,316,370
24
134
2,820,000
582,000
102.8%
25
119
1,960,000
480,000
100.0%
28
Cust Prof Analysis All by Opine
READY
145%

Exhibit 5-15
Cumulative Operating Income as a
Percentage of Total Operating Income
Customer-Profitability Pro-
file in Terms of Cumulative
Operating Income as a Per-
centage of Total Operating
Income: Patio Grill Company
110
100
90
Patío Gríll
80
75% of actual
company
operating income
70
60
50% of actual
50
operating income
40
30
25% of actual
20
operating income
10
Customers*
*Customers ranked by operating income.
112 -
F 80L
116-
-0-
121 -
124
E SEL
F EL
FEL
111 -
F90L

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