Paper Delivery has decided to analyze the profitability of five new customers.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Paper Delivery has decided to analyze the profitability of five new customers. It buys recycled paper at
$ 11
per case and sells to retail customers at a list price of
$14.70
per case. Data pertaining to the five customers are:
|
Customer
|
|||||
|---|---|---|---|---|---|
|
|
1
|
2
|
3
|
4
|
5
|
|
Cases sold
|
2,050
|
8,840
|
61,800
|
34,100
|
2,700
|
|
List selling price
|
$14.70
|
$14.70
|
$14.70
|
$14.70
|
$14.70
|
|
Actual selling price
|
$14.70
|
$14.50
|
$12.80
|
$14.18
|
$13.20
|
|
Number of purchase orders
|
16
|
22
|
39
|
31
|
34
|
|
Number of customer visits
|
3
|
2
|
7
|
4
|
4
|
|
Number of deliveries
|
18
|
32
|
69
|
40
|
34
|
|
Miles traveled per delivery
|
17
|
7
|
10
|
11
|
44
|
|
Number of expedited deliveries
|
0
|
0
|
0
|
0
|
3
|
ctivity
Cost Driver Rate
Order taking
$200 per purchase order
Customer visits
$50 per customer visit
Deliveries
$2 per delivery mile traveled
Product handling
$0.50 per case sold
Expedited deliveries
$310 per expedited delivery
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