costacctg13_sm_ch05

10101200000 12000 cutting 603600hours 216000

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Unformatted text preview: of Items Sold Indirect Costs Direct Costs DIRECT COST COGS 5­16 5­24 (15–20 min.) ABC, wholesale, customer profitability. Chain 1 Gross sales $50,000 Sales returns 10,000 Net sales 40,000 Cost of goods sold (80%) 32,000 Gross margin 8,000 Customer­related costs: Regular orders $20 × 40; 150; 50; 70 800 Rush orders $100 × 10; 50; 10; 30 1,000 Returned items $10 × 100; 26; 60; 40 1,000 Catalogs and customer support 1,000 Customer related costs 3,800 Contribution (loss) margin $ 4,200 Contribution (loss) margin as percentage of gr oss sales 8.4% 2 $30,000 5,000 25,000 20,000 5,000 3 4 $100,000 $70,000 7,000 6,000 93,000 64,000 74,400 51,200 18,600 12,800 3,000 5,000 260 1,000 9,260 $ (4,260) (14.2%) 1,000 1,000 1,400 3,000 600 400 1,000 1,000 3,600 5,800 $ 15,000 $ 7,000 15.0% 10.0% The analys is indicates that customers’ profitabilit y (loss) contribution varies widely fro m (14.2%) to 15.0%. Immediate attention to Chain 2 is required which is currently showing a loss...
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