P5-63 - P5-63 Boston Depot - Customer Profitability...

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Unformatted text preview: P5-63 Boston Depot - Customer Profitability Analysis #3 - Is the City of Albion a more profitable customer? Customer Profitability Analysis Omega Int'l City of Albion Sales $80,000 $80,000 Product Cost (50,000) (48,000) Service Fees (14,000) (14,000) Gross Margin $16,000 $18,000 Gross Margin % 20% 22.5% Distribution Services Activities for OI and CA Omega Int'l City of Albion # of requisitions 300 700 Requisition line 900 2100 Avg. # of cartons in warehouse 50 500 # of miles per delivery 5 6 Activity Total Estimated Annual Expense Cost Driver Requisition handling Warehouse Pick-packing Data entry Delivery charge $3,000,000 $1,050,000 $900,000 $600,000 $10 + .30/mile Sales Product Cost Service Fees Gross Margin Gross Margin % Omega Int'l City of Albion $80,000 $80,000 (50,000) (48,000) (9,450) (28,010) $20,550 $3,990 26% 5.0% #2 - Using ABC, compute the total distribution costs for each of the customers. Distribution Services Activities for OI and CA Omega Int'l City of Albion # of requisitions $3,000.00 $7,000.00 Requisition line 2,250.00 5,250.00 Avg. # of cartons in warehouse 750.00 7,500.00 # of miles per delivery 3,450.00 8,260.00 $9,450.00 $28,010.00 Est. Annual Activity Level #1 - Using ABC, compute the charges per unit of service activities Cost per activity level Requisitions 300,000 $10.00 # of cartons 70,000 $15.00 Pick-pack lines 600,000 $1.50 Pick-pack lines 600,000 $1.00 ...
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