Ch_14 Solutions - 1 Avery Okie Revenues $ 260,000.00 $...

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1 Avery Okie Revenues $ 260,000.00 $ 200,000.00 Technician and Equipment Cost $ 182,000.00 $ 175,000.00 Gross margin $ 78,000.00 $ 25,000.00 Service Call Handling $ 11,250.00 $ 18,000.00 Web-Based Parts Ordering $ 9,600.00 $ 16,800.00 Billing/Collecting $ 1,500.00 $ 4,500.00 Database Maintenance $ 1,500.00 $ 2,400.00 Customer-Level Operating Income $ 54,150.00 $ (16,700.00) 2 Customer Code Wizard $ 84,300.00 $ 322,000.00 Avery $ 54,150.00 $ 260,000.00 Duran $ 700.00 $ 212,000.00 Grainger $ (10,200.00) $ 122,000.00 Okie $ (16,700.00) $ 200,000.00 $ 112,250.00 $ 1,116,000.00 Summary Graphics: Customer-Level Operating Income Customer Revenue Wizard Avery D $(40,000.00) $(20,000.00) $- $20,000.00 $40,000.00 $60,000.00 $80,000.00 $100,000.00 Customer-Level Oper 120% 140% Whale Curve of Cumulative Profitability
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Wizard Avery Duran 0% 20% 40% 60% 80% 100% 120%
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Wizard Grainger Duran $ 322,000.00 $ 122,000.00 $ 212,000.00 $ 225,000.00 $ 107,000.00 $ 178,000.00 $ 97,000.00 $ 15,000.00 $ 34,000.00 $ 3,000.00 $ 9,000.00 $ 13,500.00 $ 4,800.00 $ 12,000.00 $ 12,000.00 $ 4,500.00 $ 3,000.00 $ 6,000.00 $ 400.00 $ 1,200.00 $ 1,800.00 $ 84,300.00 $ (10,200.00) $ 700.00 26.18% $ 84,300.00 75% 20.83% $ 138,450.00 123% 0.33% $ 139,150.00 124% -8.36% $ 128,950.00 115% -8.35% $ 112,250.00 100% Customer-Level Op. Income as % of Revenue Cumulative Cust.- Level Op. Income Cumulative Cust.-Level Op. Income as a % of Total Cust.-Level Op. Income Duran Grainger Okie rating Income y for Instant Service’s Customers
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Grainger Okie
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1 The activitiy-based costing for each customer is: Ann Arbor Pharmacy San Diego Pharmacy Order Processing $ 546.00 $ 294.00 Line-Item Ordering $ 715.00 $ 665.00 Store Deliveries $ 235.00 $ 329.00 Carton Deliveries $ 420.00 $ 504.00 Shelf-Stocking $ 32.50 $ 68.25 Operating Costs $ 1,948.50 $ 1,860.25 The operating income of each customer is: Ann Arbor Pharmacy San Diego Pharmacy Revenues $ 13,000.00 $ 13,300.00 COGS $ 10,500.00 $ 11,900.00 Gross Margin $ 2,500.00 $ 1,400.00 Operating Costs $ 1,948.50 $ 1,860.25 Operating Income $ 551.50 $ (460.25)
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1 Hotel Restaurant Revenue $ 16,425,000.00 $ 5,256,000.00 Direct Costs $ 9,819,260.00 $ 3,749,172.00 Segment Margin $ 6,605,740.00 $ 1,506,828.00 Fixed Overhead Costs Income Before Taxes Segment Margin % 40.22% 28.67% 2 Hotel Restaurant Direct Costs $ 9,819,260.00 $ 3,749,172.00 Direct Cost % 55.11% 21.04% Square Footage 80,000.00 16,000.00 Square Footage % 50.00% 10.00% No. of Employees 200 50 No. of Employees % 40.00% 10.00% A Cost allocation based on direct cost: Hotel Restaurant Revenue $ 16,425,000.00 $ 5,256,000.00 Direct Costs $ 9,819,260.00 $ 3,749,172.00 Segment Margin $ 6,605,740.00 $ 1,506,828.00
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