MediFitBod manufactures personalised fitness devices that measure fitness output and body health and composition data. It is currently used by both medical services and the fitness industry. Currently MediFitBod have two main customers and several smaller customers. The management accountant feels that it is important to determine the customer profitability for each of their main customers, FitPro and Medifix, as this information will help determine both the profitability of each customer and may also lead to identifying potential ways to reduce costs. The following data forms the basis for the customer profitability analysis: Customer-driven activities Sales activity Order taking Special handling Special shipping Cost driver Sales visits Sales activity Order taking Special handling Special shipping Purchase orders Units handled Shipments Cost driver data for the two major customers for 2020 are: Customer-driven activities FitPro 8 sales visits 15 purchase orders 800 units handled 15 shipments The following data relates to those two customers: FitPro Sales revenue $500,000 Cost of goods sold $200,000 General selling costs $48,000 General administrative costs $38,000 Cost driver rates $1,200 $400 $100 $1,500 Medifix 6 sales visits 20 purchase orders 600 units handled 40 shipments Medifix $300,000 $120,000 $36,000 $32,000 Required: a) In the table below prepare a customer profitability analysis for FitPro and Medifix.
MediFitBod manufactures personalised fitness devices that measure fitness output and body health and composition data. It is currently used by both medical services and the fitness industry. Currently MediFitBod have two main customers and several smaller customers. The management accountant feels that it is important to determine the customer profitability for each of their main customers, FitPro and Medifix, as this information will help determine both the profitability of each customer and may also lead to identifying potential ways to reduce costs. The following data forms the basis for the customer profitability analysis: Customer-driven activities Sales activity Order taking Special handling Special shipping Cost driver Sales visits Sales activity Order taking Special handling Special shipping Purchase orders Units handled Shipments Cost driver data for the two major customers for 2020 are: Customer-driven activities FitPro 8 sales visits 15 purchase orders 800 units handled 15 shipments The following data relates to those two customers: FitPro Sales revenue $500,000 Cost of goods sold $200,000 General selling costs $48,000 General administrative costs $38,000 Cost driver rates $1,200 $400 $100 $1,500 Medifix 6 sales visits 20 purchase orders 600 units handled 40 shipments Medifix $300,000 $120,000 $36,000 $32,000 Required: a) In the table below prepare a customer profitability analysis for FitPro and Medifix.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:MediFitBod manufactures personalised fitness devices that measure fitness output and
body health and composition data. It is currently used by both medical services and the
fitness industry. Currently MediFitBod have two main customers and several smaller
customers. The management accountant feels that it is important to determine the
customer profitability for each of their main customers, FitPro and Medifix, as this
information will help determine both the profitability of each customer and may also lead to
identifying potential ways to reduce costs.
The following data forms the basis for the customer profitability analysis:
Customer-driven activities
Sales activity
Order taking
Special handling
Special shipping
Sales activity
Order taking
Cost driver
Sales visits
Cost driver data for the two major customers for 2020 are:
Customer-driven activities
Special handling
Special shipping
Purchase orders
Units handled
Shipments
FitPro
8 sales visits
15 purchase orders
800 units handled
15 shipments
The following data relates to those two customers:
FitPro
Sales revenue
$500,000
Cost of goods sold
$200,000
General selling costs
$48,000
General administrative costs $38,000
Cost driver rates
$1,200
$400
$100
$1,500
Medifix
6 sales visits
20 purchase orders
600 units handled
40 shipments
Medifix
$300,000
$120,000
$36,000
$32,000
Required:
a)
In the table below prepare a customer profitability analysis for FitPro and Medifix.
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