tf5 - Focus Unit 5 Focus on Customer Profitability Top ic F...

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Topic Focus 5 ©petekarici/iStockphoto Focus Unit 5 – Focus on Customer Profitability Focus on Customer Profitability Learning Objectives 1. Use activity-based costing techniques to measure customer profitability. 2. Identify alternatives for managing unprofitable customer accounts. Summary of End of Chapter Material Difficulty: E = Easy, M = Moderate, D = Difficult Bloom: K = Knowledge, C = Comprehension, AP = Application, AN = Analysis, S = Synthesis, E = Evaluation AACSB : A = Analytic, C = Communication, E = Ethics AICPA FN: DM = Decision modeling, RA = Risk Analysis, M = Measurement, R = Reporting, RS = Research, T = Technology AICPA PC: C = Communication, I = Interaction, L = Leadership, P = Professional demeanor, PM = Project Management, PS = Problem Solving and Decision Making, T = Technology IMA: BA = Business applications, BP = Budget Preparation, CM = Cost Management, DA = Decision Analysis, FSA = Financial Statement Analysis, PM = Performance Measurement, R = Reporting, SP = Strategic Planning Item L. O. Difficulty Level Minutes to Complete Bloom’s Taxonomy AACSB AICPA FN AICPA PC IMA Ethics Coverage GUIDED UNIT PREPARATION 1 1 E 4 K A R PS CM 2 1 E 4 K A R PS CM 3 1 E 4 K A M PS FSA 4 1 E 5 C A M PS CM 5 2 E 5-7 K A DM PS DA 6 2 E 4 C A DM PS DA EXERCISES T5-1 1 M 10 C A M PS FSA T5-2 1 M 5 AP A M PS CM T5-3 1 M 8 C A M PS CM T5-4 1 M 25-30 AP, AN A M PS CM, FSA T5-5 1 M 20-25 AP, AN A M PS CM, FSA T5-6 1 M 20-25 AP, AN, E A M, DM PS DA, FSA T5-7 1,2 M 15-20 AN, E A M, DM PS CM, DA PROBLEMS T5-8 1, 2 D 40-45 AP, AN, E A M, DM PS CM, DA, FSA T5-9 1, 2 D 45-50 AP, AN, E A M, DM PS CM, DA, FSA T5-10 2 M 20-25 AN, E A M, DM PS DA, FSA T5-11 2 D 25-30 AN, E A M, DM PS DA, FSA T5-1
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Solutions for Davis & Davis, Managerial Accounting , 2 nd ed. SOLUTIONS TO GUIDED UNIT PREPARATION 1. Many of the selling costs companies incur come in the form of salaries: technical support staff, sales staff, order/data processing staff, etc. Other expenses include travel expenses for sales staff, advertising, trade shows, etc. 2. Except for commissions, resources consumed to provide services to customers cannot be directly traced to a customer, much like the overhead costs in a production facility. Therefore, costs have to be allocated to customers. 3. Customer revenues - Cost of goods sold - Allocated selling expenses = Customer net profit revenues Customer profit net Customer margin profit Customer = 4. Customers that require a lot of assistance tend to drive up a company’s costs. For example, making calls to technical support instead of reviewing a website of frequently asked questions will increase costs or will put a strain on the technical support resource. If a company wants customers to receive technical support in a certain amount of time, an increase in the use of technical support requires a company to hire more staffing for the technical support group.
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